Wall Street's Big Payday: Double-Digit Bonus Hikes Seen Across Big Banks

Top Wall Street investment banks such as Goldman Sachs, Morgan Stanley and Bank of America (BofA) are expected to hike bonus payments for investment bankers in double digits this year as favorable market conditions led to an increase in dealmaking last year.

Bank of America is expected to increase its bonus payments by 10% on an average. Some bankers are likely to receive smaller bonuses in the mid-to-high single digits, while top performers will exceed the 10% range, Reuters reported.

The payouts are scheduled in February, following the bank's announcement of its fourth-quarter earnings on Jan. 16.

According to Bloomberg, this season, trader bonuses at Morgan Stanley and JPMorgan Chase are set to rise by more than 10%.

BofA Securities acquired the third global positioning in the fourth quarter, garnering $1.4 billion in revenue and marking a significant increase from the same period in 2023 when revenue stood at $958 million, according to Dealogic data cited by Reuters.

Alan Johnson, founder of compensation consultancy Johnson Associates, said the payouts will increase because of lower interest rates set by the Federal Reserve, and record-high stock markets.

According to Bloomberg, Goldman Sachs is expected to exceed all expectations with its bonus increases, potentially offering even larger payouts than anticipated. Investment banks are now focusing on handing out hefty bonuses.

The generous payouts follow years of cautious spending and sluggish growth. The sector found it difficult to duplicate the spike in trade and deal-making that occurred at the height of the pandemic. Many employees felt underpaid because last year's meager increases fell short of inflation.

Overall bonuses may increase by up to 35% after a two-year decline, Johnson Associates told Business Insider. The recovery in mergers and capital raising operations, which is expected to continue to pick up steam, is the main driver of this expected improvement.

Business Insider spoke to recruiters and banking insiders to find out when staff at big banks are expected to receive the bonuses. However, the authorities revealed that the announcement dates are frequently flexible and subject to change, and bonus information is usually kept confidential.

Morgan Stanley is expected to reveal employees about 2024 bonuses as soon as this week, according to three people with knowledge of the bank's plans. Goldman Sachs is scheduled to communicate about bonuses to employees as soon as next week and JPMorgan Chase the week after that, people with knowledge of the banks' plans told Business Insider.