Here’s how Wall Street bosses hope to get rid of lagging bankers this year

As Wall Street faces another year of sluggish dealmaking, top brass hopes another disappointing bonus season will push out underperformers.

After hiring employees en masse during the pandemic to process a huge flood of deals, financial firms are now scrambling to lay off additional staff. Some, like Citigroup, are implementing aggressive cuts, while Goldman Sachs has reinstated an annual sacrifice ritual.

But others, who aim to take a gentler approach, hope that a bad bonus will be enough to encourage a banker to put his desk in a cardboard box and pull out his security card one last time.

A top Wall Street executive said bonus season is often a reality check, and when bankers start comparing year-end payouts it can be a wake-up call.

“Everyone thinks they are an excellent performer,” the source said. “Many are not self-aware.”

Earlier this week, it made headlines that Goldman was looking to reward its top-performing traders and dealmakers despite the bank’s latest dismal quarterly earnings report. However, some ruled out that this was common practice.

“Everyone thinks they’re a great performer,” one source said. “Many are not self-aware.”
Paola Morrongiello

“They always pay the best,” the source said. “They always want to make sure the best ones don’t leave.”

Overall, bankers this year face payments that could shrink by as much as 25% as deals dry up amid rising interest rates, according to a survey released this week by Johnson & Associates.

While this sounds difficult, stragglers may not receive any bonuses.

In recent years, those on Wall Street have taken a hit when it comes to bonuses, which typically make up the majority of a financier’s salary.

Just two years ago, companies were doling out record bonuses as financial giants like Goldman Sachs and JPMorgan struggled with a severe shortage of bankers amid a massive labor shortage.

In 2021, the historic tide of mergers, IPOs, spinoffs and other big strategic deals left bankers’ bonuses 30 to 35% higher than their 2020 bonuses. But the good times came to an end in the year past, with some bonuses dropping as much as 45%. % as financiers worried about the possibility of an imminent recession. Unfortunately for those on Wall Street, that downward trend is expected to continue.

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