Wall Street expected to see second year of declining bonuses: Report

Forecast gloomy amid ongoing fee pressure and regulation
By Olivia Oran
|hrreporter.com|Last Updated: 11/08/2016
A man sits on a marble wall as pedestrians walk on the streets in front of the New York Stock Exchange in New York, U.S., October 3, 2016. REUTERS/Lucas Jackson

(Reuters) — Wall Street bonuses are expected to fall for a second consecutive year, according to a closely watched report.

Mergers and acquisitions slowed this year, and companies delayed going public, which pressured bank fees. Increased regulation has also made trading less profitable for banks.

Overall year-end incentives, which include cash bonuses and equity awards, may decline on Wall Street across the board by five per cent to 10 per cent from last year, the report said.

"All signs are pointing to a disappointing end to an overall lacklustre year on Wall Street," said Alan Johnson, managing director of Johnson Associates, which conducted the study.

Investment bankers, who help companies raise debt and equity, may experience the biggest drop, with their bonuses falling 10 per cent to 20 per cent.

Equities traders may draw payouts that are five per cent to 15 per cent smaller, as investors shied away from trading stocks, which are generally viewed as riskier than bonds.

Debt traders will fare slightly better, with their bonuses expected to be down 10 per cent to flat. Bond trading rebounded at most large banks during third quarter, reversing a slump that has plagued Wall Street for years.

Even mergers and acquisition bankers, who enjoyed a banner year for deals in 2015, could see bonuses that are five per cent to 10 per cent lower.

The only professionals on Wall Street who may see higher bonuses are retail and commercial bankers, with a flat to five per cent rise.

Banks set aside around roughly 40 per cent of revenue for employee pay and benefits, around the same as last year, Johnson Associates found.

Johnson said that 2017 could be another difficult year for bonuses, amid ongoing fee pressure and regulation.

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