Banker bonuses are set to be so bad even the firm's revenue drivers are going to get dinged




Welcome back! It's Dan DeFrancesco checking in from NYC. Honestly, I didn't even want the US to win such a controversial World Cup.

Today we've got stories on Ken Griffin's extravaganza in Disney World, how SBF tried to gain a political influence, and why the rise of private debt is a real concern.

But first, I've got bad news.

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wall street trader sad
wall street trader sad  

A man pauses outside of the New York Stock Exchange (NYSE) on January 15, 2016 in New York City.Spencer Platt/Getty Images

1. Bummer season.

Let's not sugarcoat it: Bonus season is going to suck.

After Wall Street's banner 2021, bonuses are expected to come back to Earth like a lead balloon.

While they aren't internally announced and paid until early next year, firms are wrapping up discussions about the size of bonus pools that divisions will be able to disperse from. And for many firms, the pools are being resized from Olympic to kiddie.

A November report from compensation consulting firm Johnson Associates painted a stark picture of what bankers should expected to get paid, with some pools getting cut as much as 45% compared to 2021.

One month later the picture hasn't gotten any prettier. The Financial Times reported Friday that JPMorgan Chase, Citigroup, and Bank of America are considering cutting bonus pools within M&A and IPO teams by 30%.

While none of this is surprising - the market for deals and public debuts has been about as active as FTX's risk-management team - it doesn't make any of this easier for bankers. Seeing a significant chunk of your overall comp cut by nearly a third is a tough pill to swallow. How do you expect them to get a reservation at Dorsia at this rate?

Despite this being evident for a while, there is at least one group that might be surprised.

Trading has been a bright spot for many, thanks to market volatility, with some banks even generating more revenue than last year, particularly fixed-income groups that benefitted from an increase in rates. But hold off on that trip to the Maserati dealership, traders.

It turns out the deep losses in other parts of the bank might ruin the fun for the actual earners.

Take Goldman Sachs, which is reportedly preparing to cut the bonus pool for its global markets division by "a low double-digit percentage," according to Bloomberg. This comes despite expectations that the firm's annual trading revenue will beat 2021's number by 15%.

Having to sacrifice comp as a result of others lack of production? I thought this was Wall Street, not the USSR?!

It'll be interesting to see where Goldman, along with the rest of the Street, lands on its bonus-pool allocations. People moves tend to ramp up in the wake of bonus season. And while the job market is not what it once was, a profitable trader, let alone an entire team, could easily find a new home if they feel they've been penalized for another division's lack of success.

In other news:

Getty Images for Anheuser-Busch

2. Everyone but the banks are willing to lend money in a trend that surely won't backfire. The global private-debt market has swelled to $1.2 trillion as pension funds, college endowments, and fund managers look to make loans. But as a recession looms, things can get tricky. Click here to learn more.

3. Ken Griffin. Coldplay. Disney World. Carly Rae Jepsen. Diplo. What do these five things have in common? They're all part of the blowout 20th-anniversary celebration for Griffin's Citadel Securities. Read more about the all-inclusive weekend Griffin organized for his employees.

4. Inside SBF's political push. A key part of Sam Bankman-Fried's crypto empire was the strides he was making in Washington via big campaign contributions and lavish parties. Read Insider's deep dive on how he looked to gain influence in the nation's capital.

5. Investors aren't happy with tech companies giving out stock like it's candy. Stock-based compensation was an easy way to attract and retain talent when things were going good. But amid a market downturn, investors are raising concerns. Here's why.

6. Crypto turns to Madison Avenue. Firms like Binance, Grayscale, and OKX are launching marketing campaigns as the industry looks to bounce back in the wake of the FTX debacle. More on how crypto firms are hoping ads can quell trust concerns.

7. The post-Dalio era at Bridgewater Associates is off to a rough start. The world's largest hedge fund, which this fall saw its founder Ray Dalio step aside, has erased most of this year's returns over the past few months, Bloomberg reports. Inside Bridgewater's difficult two-month stretch.

8. BNY Mellon's CEO calls for crypto "reset." In an opinion piece penned for the Financial Times, Robin Vince details how crypto should move forward in the wake of FTX. I wonder if BNY Mellon's own crypto business will happen to be a key piece of this suggested reset? Read more here.

9. A former FTX executive is already on the hunt for funding for a new crypto startup. Brett Harrison, the former president of FTX's US arm, is raising money for a startup focused on crypto trading software, The Information reports. This is what we know about the raise.

10. These pictures of deep-sea animals are nightmare fuel. Check out the bizarre animals scientists recently discovered on the recesses of the Indian Ocean floor. Warning: It ain't pretty.

Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London. 

 

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