Morning Coffee: Why Morgan Stanley increased MD bonuses more than the rest. The graduates not getting promoted to save money
Morgan Stanley's bonuses have elicited some complaints, and Bloomberg today helps to explain why.
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Some senior bankers there have had much bigger bonus increases than junior bankers. However, Bloomberg says there is a good and valid reason for this.
Referring specifically to Asia, Bloomberg says Morgan Stanley's senior bankers were given "lean" bonuses in 2023, when 20% received nothing at all. This year, Morgan Stanley compensated for that. Some managing directors (MDs) at Morgan Stanley in Asia got bonus increases of 30-40%. Others got increases in the high teens.
By comparison, junior bankers' bonuses at Morgan Stanley were reportedly protected in previous years; Morgan Stanley had less need to pay them up this year. As a result, Bloomberg says bonuses for vice presidents and executive directors in Asia increased by a lower 10-15%. There's no mention of analysts or associates.
It's not clear whether the Asia bonus pattern has been repeated elsewhere, but Morgan Stanley bankers in London have been complaining. "There seems to be a policy of increased differentiation depending on the ranking," said one London executive director, adding that he was happy, but others were not. Junior bankers in London said they were "surprised and disappointed" and that senior staff seemed to have drained the bonus pool.
Globally, Morgan Stanley's investment banking revenues increased by 25% last year, which was below the median of 39% for US banks according to KBW. However, Morgan Stanley's Asian bankers thrived: as we noted last week, its APAC investment banking revenues increased by 61% year-on-year in 2024, versus a fall in fees of 11% in Asia as a whole.
Separately, the Times reports that PWC has discovered a new way of saving money. - Graduate hires are not being promoted as expected.
In normal times, PWC's consulting trainees reportedly spend two years on the graduate scheme and are then promoted from associate to senior associate, at which point they receive a pay rise. This year and last year, however, they'll need to wait an extra six months for the promotions.
PWC says it's just an attempt to stagger the promotions so that everyone's not promoted all at once.
Meanwhile...
Of the $3.7 trillion in profits hedge funds have earned as an industry since 1969, nearly half or a staggering $1.8 trillion was gobbled up as fees. (Bloomberg)
Eight people have left Nomura's FX options team. Now David Leigh, who joined from Deutsche Bank last year, wants to hire some new ones. (Bloomberg)
Barclays is rebuilding its APAC equities business and it's hired Paul Johnson the APAC co-head of equity derivatives and head of exotics equity derivatives trading at Goldman Sachs in Hong Kong. (The Trade)
When he was at JPMorgan, Vis Raghavan liked to call people "lazy." Now that he's at Citi he's all about cross-selling and suggests that Citi has been complacent. A mystery Citi banker says: “At JPMorgan, bankers demand lots of business without any embarrassment whatsoever. If they won one thing, they would demand other products There was a feeling at Citi that if we got one thing, everyone would be chuffed and satisfied. That’s part of what Vis is looking to change.” (Financial News)
Yann Adem, who worked in US swaps and treasuries trading at HSBC, was discovered using code words and slang to discuss taking drugs at a music festival on his company phone. He was fired for gross misconduct in 2022. Yesterday, he dropped his claim for unfair dismissal and disability discrimination. (Bloomberg)
After developers were deterred from starting new projects, there's now a shortage of high quality office space in London. 22 Bishopsgate, a skyscraper completed four years ago, now has full occupancy. (Bloomberg)
State Street is thinking of leaving Canary Wharf for the City of London. (Bloomberg)
Private equity firm Warburg Pincus is expanding in the Middle East. (Bloomberg)
EY and PWC are going to miss their targets for female partner representation. PwC wants 30% of partners to be women this year, but is stuck at 27%. (Financial Times)
A mystery London investment banker involved in a turbulent divorce case was acquitted. (Mountford Chambers)
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