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Wall Street bonuses are on course to rise by as much as 35 per cent this year, as bankers eye even greater potential payouts under a second Donald Trump presidency.
Activity levels for corporate deals, stock sales and debt transactions have gradually recovered in 2024, following a fallow two years when high interest rates curtailed dealmaking and fees for investment banks and money managers.
An analysis by New York-based pay consultancy Johnson Associates, published on Tuesday, showed that pay for 2024 is expected to jump across every business area except real estate investing, and retail and commercial banking.
Investment bankers working on debt deals stand to reap the largest gains, with increases of between 25-35 per cent, Johnson Associates said.
Steadying interest rates have pushed corporate borrowers to refinance or raise new debt, lifting global fees from debt capital markets deals by almost 40 per cent, according to Dealogic data.
Troubled aeroplane manufacturer Boeing has also raised billions of dollars in new debt this year, in a deal led by Bank of America, Citigroup, JPMorgan and Wells Fargo.
Globally, investment banking fees were about 20 per cent higher in the first 10 months of 2024 than a year earlier, at almost $40bn, LSEG data shows.
Activity levels are still more muted than in the deal frenzy of 2021. However, bankers are increasingly optimistic that a more relaxed posture towards antitrust and the pro-deregulation agenda of the second Trump administration will usher in another boom in mergers and acquisitions.
Alan Johnson, who runs Johnson Associates, said 2024 Wall Street pay ranked as about seven out of 10 compared with previous years. “This was a good year. I think most people are expecting next year to be a good year,” he said.
Johnson Associates’ analysis is mainly US focused and based on “ongoing monitoring of the financial services industry, numerous proprietary data points and public data from 13 of the nation’s largest investment and commercial banks and 17 of the largest asset management firms”.
Stocks of banks and asset managers soared last week following Trump’s victory. Goldman Sachs, which regularly tops the industry league tables for M&A work, posted some of the industry’s biggest share price gains.
Even before last week, optimism was building that 2025 would be a good year for the financial services industry.
Lower interest rates have eased financing conditions for private equity investors, while global companies have stepped up the pace of dealmaking. Goldman stands to earn more than $90mn for its work advising Pringles and Pop-Tarts maker Kellanova on its $36bn sale to Mars if that deal ends up being completed.
Sizeable fees have fostered a fierce war for talent, with employers offering substantial guaranteed salaries to attract new bankers.
A top executive at Evercore, which largely focuses on advisory work and hired significantly in recent years, last month told investors that “the competition for bankers remains intense and the associated cost of hiring new bankers and retaining existing bankers continues to be significant”.