London Banker Bonuses Shrinking

Bankers in London’s financial districts expect bonuses to shrink by about a fifth from last year as the sovereign-debt crisis crimps revenue.

The average worker in the U.K. capital’s Square Mile and Canary Wharf expects to receive a bonus valued at about 19,920 pounds ($30,854), or 24 percent of their base pay, according to a survey by recruitment firm Astbury Marsden. That’s down from about 35 percent of base pay, or 25,570 pounds last year. The estimate is based on an average salary of 83,000 pounds.

“That is a real shift in sentiment on bonuses from previous years,” Mark Cameron, chief operating officer at Astbury Marsden, said in the statement. “In the pre-credit crunch days, bonuses were talked about in many multiples of base pay. This year the expectations are for fractions of salary.”

Lenders are reducing staff from New York to London as the European sovereign-debt crisis roils markets, crimps revenue from trading stocks and bonds, and deters companies from takeovers or stock offerings. Banks are struggling to cut fixed costs after raising base salaries of investment bankers by as much as 100 percent to cushion cutbacks after regulators, including those in Britain, imposed limits on bonuses.

New York Cutbacks

The cuts are also extending to staff on Wall Street, according to a Wall Street Journal report today, citing a survey by Options Group. Annual compensation on Wall Street may fall 27 percent to 30 percent from a year earlier, making it the lowest level since 2008, the report said. Bonuses on average may drop 35 percent to 40 percent, according to Options Group.

Banks, insurers and asset managers in Western Europe have been hardest hit by falling revenue, announcing about 105,000 dismissals this year, 66 percent more than in 2008 at the depths of the financial crisis, data compiled by Bloomberg show. The 50,000 job cuts in North America this year are more than twice last year’s and fewer than the 175,000 in 2008.

Managing directors are expecting a bonus equivalent to 70 percent of their base pay, or about 166,000 pounds, based on a salary of 237,000 pounds, Astbury Marsden said.

The firm polled 1,380 City professionals, from analysts to senior bankers. The biggest bonus expectations came from merger bankers, while those working in fixed income had the lowest bonus expectations, Astbury Marsden said.

Investment banks set aside revenue throughout the year for compensation and tend to decide bonuses at year-end, with most paid out in February and March.

To contact the reporter on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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London Bankers See Bonuses Shrinking Amid EU Crisis

Jason Alden/Bloomberg

The Canary Wharf business district is seen in London. Banks are struggling to reduce fixed costs after the raising base salaries of investment bankers by as much as 100 percent to cushion bonus cutbacks after regulators, including those in the Britain, imposed limits on bonuses.

The Canary Wharf business district is seen in London. Banks are struggling to reduce fixed costs after the raising base salaries of investment bankers by as much as 100 percent to cushion bonus cutbacks after regulators, including those in the Britain, imposed limits on bonuses. Photographer: Jason Alden/Bloomberg

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Nov. 28 (Bloomberg) -- U.K. house prices dropped for a seventh month in November, property researcher Hometrack Ltd. said, while bankers in London's financial district expect bonuses to shrink by about a fifth from last year as the sovereign-debt crisis crimps revenue. Francine Lacqua reports on Bloomberg Television's "Countdown." (Source: Bloomberg)