It looks like it is going to be an ugly bonus season on Wall Street.
While pay may increase slightly in the broader financial-services world—including retail banks, hedge funds and private-equity firms—bonuses at the core Wall Street firms are likely to take a double-digit hit, analysts and pay consultants say. On Monday, New York Stock Exchange member firms that conduct business with the public reported third-quarter after-tax profits of $4.7 billion, down from $8.7 billion in the third-quarter of 2009.
Wall Street bonuses are likely to be down 22% to 28% this year, according to Options Group, an executive-search and consulting firm. The drop follows last year's much-criticized surge in banker pay and highlights growing uncertainty on Wall Street ahead of regulatory scrutiny and weak financial markets.
Bankers at Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., Bank of AmericaCorp.'s Merrill Lynch and J.P. Morgan Chase & Co. say they are being told bonus pools are likely to be down between 10% to 25%. Some divisions, like proprietary trading, could be down as much as 50%, bankers said.
Exact bonus amounts won't be known for another month or two, since most banks pay out bonuses early in the new year. Yet senior bankers who have seen bonus-pool estimates say many employees are likely to be disappointed.
One Citi banker said colleagues who have been coming out of compensation meetings in the past two weeks "look like they've been hit by a truck."
This is a great story. But we want even more details. Send us your latest compensation information. Email NetNet@cnbc.com or send a text starting with the words "netnet" to 26221 (that spells CNBC-1). Anonymity guaranteed!
Companies mentioned in this post
Bank of America
Questions? Comments? Email us atNetNet@cnbc.com
Follow John on Twitter @ twitter.com/Carney
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC