Associate Stub Bonus COVID
What are stub bonuses normally for Associate 0s at a BB? And do you think banks are going to significantly cut that due to COVID?
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Hey Associate 1 in IB - Ind, what a lonely thread. I'm here since nobody responded ...so maybe one of these discussions will help:
More suggestions...
Fingers crossed that one of those helps you.
Curious to this as well. Anyone with insight?
It was 35-40k this year. I wouldn’t be surprised if that was cut. Some banks are starting the program later AND doing longer, virtual training. Assume that you lose 2 of the 5 stub months and you’re at $21k prorated stub.
Factor in all the uncertainty and it seems likely. There’ll also be a lot of morale related optics to worry about. Would a 3rd year associate be pleased that an A0 with 3 mos on the desk (aka is barely productive) gets $35k as a stub when their bonus gets cut by $50k?
isnt the A0 in a waymorei mportant for the bank in the next 2-3 years.
for all we know A3 may be dipping out anyway as he comes end of his associate years
No associate has ever been valuable or important, especially an Associate 0
Not really. Associates are hired because the bank sees them as a pipeline to future MDs. That funnel is very tight. Maybe 20% of an Associate class will make it to MD, with majority of that attrition coming from the first 2 years. A bank will definitely value a 3rd year who is a known quantity (if they were horrible they would have been eased out already) vs a complete unknown like an Associate 0, and this is coming from someone who just got through that first Associate year. An Associate 0 is more likely to dip than an Associate 3
I am not in any way more valuable than a 3rd year
Do you think it’s possible to completely scrap stub bonuses this year bc of covid? Or will they do even a meager amount ~10k for morale/optics for incoming class? I get that it may be group dependent too as some have been doing well even with the crisis. Thanks!
You guys are delusional if you think an Associate 0 is gonna get paid $40k as usual and then an Associate 3 is gonna get bonus cut by 50% (which is the rumour right now)
There are a few things you need to realistically consider.
First... how has your Bank's health been for the last 6 months and 12 months. Just using JP Morgan as an example. In 1H of 2020, the firm had a Net Income of $7.5Bln. For 1H of 2019, their Net Income was $18.8Bln. That's a ~60% decline YoY. To put that in perspective. In 1H20, JPM had $18.7Bln (~30%) held Provisions for Credit Losses against $62.8Bln in Net Revenue. At this point last year, JPM has $2.7Bln (~4.5%) in Provisions for Credit Losses against $59.2Bln in Net Revenue. Assuming that JPM pays bonuses out of a pool generated by Net Income, the aggregate 2020 Bonus Pool will be down.
Second, how deep will the cuts go? Just using 2009 as a proxy, the average bonus on Wall Street dropped about 50% from the 2007 high. While I'm not going to say that the impact will be this severe, if the rumors are that A3 bonuses are expected to be cut in half, I would expect the A0 bonsues to be cut in half as well.
Third, how are banks calculating the stubs. Using the example were posted anonymously, if the stub is $40K, and they are prorating it out to a 3 Month stub because of longer training and starting later, the prorated stub works out to $26K. Add in the deep cuts and the stub will end up being closer to $13K, if any bonus is given.
Fourth, just from a heirarchical standpoint, bonsues decline from the top of the pryamid down. For easy math, if we assume that an A3 makes 200K, then an A2 would make 150K, an A1 would make 100K, and a stubbed A0 would make 40K. If there are cuts (assuming no changes to stub bonus math), everyone will get cut the same percentage. If there are talks of bonuses getting cut, can you handle your bonus getting slashed significantly?
Fifth, can you handle the peace of mind of not potentially getting a stub bonus? If you don't get a stub bonus, consider your bonus to be that you are still working. I know it's going to suck ass not getting one, but that may be a reality considering the times we live in. I remember in 08/09 where friends of mine didn't get bonuses because everything grounded to a halt. This last one is really important. If you can't, I would spend a few hours trying to make sure your finances work so you can handle not getting that bonus.
Is the firmwide net income at a place like JPM really a relevant metric for IB bonuses? Look at any of the balance sheet banks' fees / revenues within the actual IBs and they are all up big since COVID and I would imagine this would be more relevant.
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