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The other bankers on track for the biggest bonus increases this year

Last week's Johnson Associates bonus predictions for 2024 suggested that Debt Capital Markets (DCM) bankers will be the luckiest when it comes to increased bonus this year. A new report suggests they might be beaten by their colleagues in Equity Capital Markets (ECM) teams instead.

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Data from market intelligence firm Tricumen showed that ECM fee revenue jumped by 60% in the first quarter of 2024 compared to the same period of 2023. The growth was driven by a tripling of IPOs in the USA.

As the chart below shows, the average productivity for ECM bankers, measured as operating revenue per front office Full Time Employee (FTE) was up by 63% over the same time period. Banks are bringing in much higher revenues with the same number of ECM staff. 

How about the DCM bankers, whom Johnson Associates predicted would receive the biggest bonus increases? Measured on the same basis, their average productivity increased by only 33%, according to Tricumen (which also included securitization revenue for DCM bankers).

Tricumen's analysis of revenues per head in other areas of banking is less promising. In fixed income trading, some areas did well and others did not. Credit traders experienced a 20% rise in productivity; currency trading revenues per head fell 22%.

In equities sales and trading, Tricumen's figures suggest that revenues per head were flat. Employees working across cash equities, equity derivatives & converts, and prime services all brought in similar levels of revenues to last year.

In M&A, the average M&A banker also generated revenues similar to last year's level.

Johnson Associates is predicting a 5 to 15% increase in equities bonuses this year and flat M&A bonuses.

The latest predictions are based on first quarter performance: things may well change, but this is the lie of the land now.

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AUTHORZeno Toulon

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