Bank of America bonuses for dealmakers, traders are broadly flat -source

Reuters

Published Jan 26, 2024 02:12PM ET

Updated Jan 26, 2024 05:16PM ET

By Saeed Azhar

NEW YORK (Reuters) -Bank of America's bonus pool for investment bankers will range from steady to 3% lower for 2023 under pressure from a slowdown in dealmaking, but star performers will get higher payouts, according to a source familiar with the matter.

The company's traders can expect flat or modestly higher bonuses, except for standouts in mortgages and credit, who will receive high single-digit percentage increases over 2022, the source said.

The bank began informing investment bankers and traders about their 2023 bonuses on Friday, the source said. Discretionary compensation at Wall Street banks is highly variable and based on performance.

The second largest U.S. lender will also give stock awards to rank-and-file employees who earn $500,000 or less, or about 97% of its workforce, according to a memo seen by Reuters on Thursday.

Bank of America declined to comment.

The company posted record full-year sales and trading revenue of $17.4 billion, including zero days of trading losses in 2023.

It also reported a pickup in dealmaking in the fourth quarter, which pushed investment banking fees 7% higher to $1.1 billion.

Wall Street giants face a challenging environment beset by subdued dealmaking, economic uncertainty and geopolitical tensions. While major banks have laid off thousands of employees, they are also focused on retaining top talent to capitalize on any resurgence in economic activity.

"Variability in bonuses between stars and everyone else, and particularly bottom performers, will be more of the norm this year," said Natalie Machicao, director of the global banking practice at executive search firm Sheffield Haworth.

"It's expensive to replace stars, particularly when the market inevitably comes back later this year, and banks want to retain the people who make a difference generally."