This is a forum for BB players in the global mega-cities (NYC, London, HK, etc.), focusing mainly on predicting the future trends in comp for analysts and associates: will we return to the days of big money anytime soon? Will politicians let us? Is 2010 set to be another dim year for bonuses...
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yes, it's coming back
not for london
2010 will be better than 2009.
I would say that compensation ratios of around 40% are the new normal, as evidenced by what some of the more politically progressive banks paid out this year and how politicans reacted to it. I would guess that revenue will be about flat for the banks that did well (GS, JPM, CS), with less coming in from the trading floor but more from IBD. Overall, things will be pretty good in terms of compensation, but nothing like the halcyon days. Some banks like MS were struggling for FY09, they had to pay around 70% to keep their talent. Political and shareholder pressure is going to make it tough to repeat, so it'll be interesting to see what happens.
Forgive my ignorance but what does the compensation ratio signify? Is it bonus as a % of salary?
It refers to the % of revenue paid as compensation (from the perspective of the entire bank). Historically, it has averaged around 50%.
no problem... compensation ratio in this context represents the percentage of the firms overall revenue dedicated to employee compensation.
My best bet is that 2010 comp (paid 1Q 2011) will be flat to slightly down on average, relative to 2009 compensation (paid over the past few months). Felt like a make-up year for alot of banks and 2010 doesn't look like it will be as strong for many products.
M&A bankers will probably do much better, but I bet ECM activity falls significantly. Overall, just seems like less low hanging fruit out there this year (fewer massive recapitalizations and restructurings to provide windfall fee pots)...with the obvious exception being the recent AIG M&A.
And look for comp to continue carry a heavy stock/vesting component as opposed to the old days.
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