U.S. Investment Banks Expected To Raise Bonuses 20% To 40%

U.S. investment bank Morgan Stanley (MS) has raised its annual bonus for top-performing staff by more than 20% following a dealmaking boom over the past year.

Bankers in equity underwriting and mergers and acquisitions (M&A) advisory businesses are expected to receive some of the highest increases at the Wall Street firm due to the strong performances of those divisions over the past year.

Investment banks globally adjust their bonus pools according to business momentum. Higher bonuses help them to retain talent in a competitive business environment.

Staff within M&A and the equity capital market divisions are anticipating bonuses up at least 15% on the previous year and, in some cases, 20% or more. Other businesses whose performance was less strong in 2021 will likely see flat or single digit increases in their bonus pool.

The bonus payouts at Morgan Stanley are likely to be lower than those at Bank of America (BAC), which, according to media reports, is planning to increase the bonus pool for investment bankers by more than 40%.

Sales and trading operations at Bank of America could see a rise of more than 30% in bonuses on average, according to the media reports. Investment bank Goldman Sachs (GS), another beneficiary of the record wave of M&A activity and initial public offerings (IPOs), will inform staff of their 2021 bonuses next week.

Morgan Stanley ranks third in the global investment banking league table for fees generated, having earned $9.1 billion, up 28% in 2021 compared with the prior year, according to Refinitiv data. JPMorgan (JPM) and Goldman Sachs topped the investment banking league table, the data showed.