Following news that Deutsche Bank AG, UBS Group AG, and Societe Generale SA have planned to reduce bonus payouts for investment bankers, Barclays Plc has now joined the roster of European banks reducing bonuses for bankers. However, Barclays is taking a step further by altogether scrapping bonuses for some bankers amidst a persistent downturn in capital markets activity and dealmaking.
Based on people familiar with discussions, Bloomberg has reported Barclays executives plan to decrease the firmwide bonus pool because of the downturn in capital markets. The move won't affect junior bankers, and top dealmakers might receive a 10% reduction, but low-tier investment bankers will receive zero payouts this year.
The dearth of deals turned 2023 into one of the most challenging years for European banks.
Names like Societe Generale, UBS, and Deutsche have all recently planned to lower their overall bonuses for 2023.
Deutsche Bank Chief Financial Officer James von Moltke said last month that bonus pay will "reflect performance in 2023". In other words, what have you done for us lately?
"And as you have seen in a number of different areas of the investment banking business in particular in 2023, it has been a difficult market," Moltke added.
According to analyst data compiled by Bloomberg, Barclays' dealmaking and underwriting businesses are expected to bring in just £1.86 billion ($2.34 billion) for 2023. This would be a 16% decline compared to a year earlier and about half of what the unit brought in for 2021.
"It's been similar to what we experienced in Q2 and Q3 — not quite enough volatility for markets, but a little too much for banking," Marina Shchukina, head of investor relations, said of the bank's fourth-quarter earnings report last month.
Shchukina added: "We hope the recovery will be forthcoming in 2024."
Last year, Barclays bankers also faced a disappointing bonus payout when the bank considered reducing bonuses by upwards of 40%.
It echoes across the Atlantic in the US, where Wall Street bankers could see their payouts for 2023 plunge by as much as 25%, according to a November report from compensation consultant Johnson Associates Inc. Bonus for traders are also expected to slump.
