Bankers' bonuses to rise most on Wall Street

• M&A bankers may receive bonuses 15-20% higher, while fixed income traders could see increases of 7.5-12.5% and bond/loan underwriters may gain 5-10%
• Private credit executives face potential bonus cuts of up to 10% after fraud cases triggered large retail client redemptions
• Private equity bonuses will be largely flat or modest (2.5-7.5% for large portfolios), as firms struggle to exit companies acquired at previously high valuations

Wall Street Bonuses Set for Significant Gains in 2024

Wall Street bank executives are poised for substantial compensation increases this year, with bonuses expected to rise most among all financial sectors, according to Johnson Associates, a financial compensation consultancy.

Key Projections

Equity markets are driving the strongest gains:

• Equity traders and equity capital markets (ECM) bankers: 20-30% bonus increase
• M&A investment bankers: 15-20% higher bonuses

Fixed income sectors show more modest growth:

• Fixed income traders: 7.5-12.5% increase
• Bond and loan underwriting bankers: 5-10% higher compensation

Alternative investments face headwinds:

• Private credit executives: flat to 10% decrease in bonuses following fraud cases that triggered retail client redemptions
• Large private equity portfolios: 2.5-7.5% increase
• Medium private equity and real estate: flat bonuses

Market Drivers

Alan Johnson, the consultancy's founder, attributed the strong performance to record-high stock markets and increased trading volumes driven by volatility. He characterized 2024 as a "pleasant surprise" for Wall Street compensation despite geopolitical tensions, inflationary pressures, and interest rate volatility.

Fixed income margins remain lower, and compensation had already risen in previous years, limiting upside potential in that sector.

Private equity firms face challenges making profitable exits from companies acquired at previously elevated prices, constraining bonus growth.

The report highlights Wall Street's resilience and the continuing strength of equity markets as primary drivers of compensation growth in the financial services industry.