Wall Street Banks' Staff Churn To Double This Year After Bonus Payouts - Experts

Staff turnover on Wall Street is set to surge in coming weeks as investment bankers who held off job-hunting during the pandemic cash in their record bonus checks and leave for new opportunities in the red-hot labor market, said recruiters.

Bonuses are up 20% to 25% on average across Wall Street thanks to last year's deal-making frenzy, but bankers have been waiting for the checks to hit their accounts -- which typically happens each year between January and March -- to jump ship.

While bonus payouts usually trigger staff turnover, recruiters and experts say 2022 could see twice as much churn as usual due to a confluence of factors: many bankers felt it was too risky to job hop during the COVID-19 pandemic and are now burnt out after working grueling hours on last year's deal bonanza.

The tight U.S. labor market has also created huge opportunities for bankers and pushed up salaries.

"We have been telling our clients for over a year now that they would have a 'double year' in 2022 in terms of turnover," said Alan Johnson, managing director of Johnson Associates, a Wall Street compensation consultancy.

"You're getting two years' worth of people who wanted to quit."

Goldman Sachs Group Inc and JPMorgan Chase paid bumper bonuses for 2021, with Goldman increasing top-performing bankers' incentive compensation by 40% to 50% and JPMorgan by 30% to 40%, Reuters reported.

Morgan Stanley raised that figure by more than 20%. Overall, 2021 bonuses on average rose by 20%-25%, Johnson Associates estimated.

That jump was largely thanks to U.S. deal volumes nearly doubling to $2.61 trillion in 2021, according to Dealogic, as corporations rushed to raise funds and take advantage of record share prices to snap up acquisitions.

Market volatility this year, which has been compounded by Russia's invasion of Ukraine, has weighed on dealmaking generally and dampened CEO sentiment toward taking companies public. With chances for big 2022 bonuses reduced, some investment bankers have little incentive to stick with their current roles, recruiters added.

This is especially true for workers who may be considering jobs outside banking, such as in Silicon Valley, where many former finance executives have found lucrative opportunities.

PAIN FOR SOME, GAIN FOR OTHERS

The pain will be felt most by banks whose staff believe they were paid less than their peers, said one New York-based recruiter who works placing analysts and associates.

Those junior bankers, who support senior dealmakers, have been quick to circulate complaints about their pay and working conditions, including 100-plus hour work weeks, on social media, pressuring Wall Street employers to raise their compensation.

Citigroup and Credit Suisse are two banks likely to suffer, said the recruiter who asked not to be named discussing sensitive pay issues.

"Litquidity," a popular Instagram and Twitter account run by an anonymous financial services worker, in late January posted comments it said were from Citigroup first-year analysts complaining their 2021 bonuses were "significantly lower" than rival banks.

Citigroup declined to comment.

Scandal-hit Swiss lender Credit Suisse meanwhile was so worried about retaining top talent that it boosted immediate cash payouts for senior bankers, provided they stuck around for three years.

Credit Suisse declined to comment, although the bank has recently made some senior investment banking hires.

"The banks that didn't pay above average are going to lose a lot of talent and are probably going to struggle to recruit new talent," said the recruiter, adding that some junior bankers are now beginning their job hunt just six months into their current role.

However, turnover works both ways, experts and executives said.

"This is the recruiting moment," said Marc Cooper, chief executive of the boutique investment bank Solomon Partners. "We have plenty of offers out, we'll see what happens."