It's Q4 and bankers are being cut before bonuses
Welcome to Q4. It's the season when people start to speculate about bonuses. And it's the season when banks start to cut jobs.
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At HSBC, these two things are happening simultaneously. On one hand, the bank has indicated that bonuses will match last year's highs. On the other, CEO Georges Elhedery reportedly declared this morning that the bank plans to cut some more senior people as part of a "de-duplication" process following the combination of its investment and commercial banks.
HSBC's cuts are likely to afflict the middle and back office, but other banks are already cutting senior bankers and traders to protect their bonus pools. Fresh from cutting swathes of credit traders in London, BNP Paribas, for example, has now cut senior credit traders in New York, including David Malvern, its head of high yield credit trading. Citi has cut various debt capital markets bankers in London in what insiders describe as a "perplexing reorganization." Bank of America has made some curious demotions.
In the US, banking headhunters claim banks like Barclays, Jefferies and Guggenheim have also been pruning investment banking teams, with senior vice presidents among those let go.
"There are going to be more retirements and changes at most platforms," predicts one senior headhunter. Amrit Shahani, a partner at BCG Expand in London, says cuts to markets teams are likely to be deepest at banks which are rates, FX and commodities heavy. "These banks are underperforming," he says. "Macro revenues are expected to be down 15-17% year-on-year in the first nine months of 2024, so bonuses will either be down or you will need senior headcount by 5-10% just to keep them flat."
The layoffs mean that it's doubly important to ensure your achievements this year are recognized. Bonus pools at US banks are currently undergoing their first cut but will likely remain fluid until December as a result of potential big gains (and losses) relating to the US election.
Even so, Matthias Schwarz, a former head of credit trading at Bank of America who now offers compensation mentoring services, says that if you're only just flagging your achievements to your boss at a US bank, you've probably left it too late. However, if you work for a European bank, like BNP, there is still time to make your case. "Europeans don't pay until February or March," reflects Schwarz. BNP is just getting its RiFs in early.
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