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Top Bankers in Asia See Pay Cuts of 50% After Drought in Deals

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(Bloomberg) — Top bankers in Asia ex-Japan at Wall Street’s biggest firms are having their worst payouts since the financial crisis more than a decade ago, according to people familiar with the matter.

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On average, managing directors at banks including Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. have seen their total compensation drop by 40% to 50%, with payouts for senior MDs falling to between $800,000 to $1.5 million and for first-year MDs to $600,000 to $1 million, the people said, asking not to be named discussing internal matters.

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Star bankers are suffering milder cuts of 20% or less in their compensation after a bumper year in 2021, with a few still taking home around $2 million. Non-performers are seeing reductions of 60% to 70%, with many being left out all together from the bonus pool. The figures reflect broad trends across major Wall Street firms in Asia, the people said. Pay may differ for certain product groups and countries.

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Global investment banks are now pushing hard to keep a lid on costs after increasing their staffing over the past few years in a war for talent and higher inflation. While Asia has been their biggest growth markets for years, job cuts have proliferated and the tough bonus news is expected to help reduce headcount further. 

Goldman plans to slash 3,200 jobs globally and has already made two rounds of reductions in Asia since September, firing mostly China-focused bankers. Morgan Stanley has also jettisoned bankers focused on China.

Business has been hard hit in China by a regulatory crackdown and the nation’s now abandoned pursuit of Covid Zero. Most dire was a move by Beijing to limit the ability by domestic companies to sell shares overseas, triggering an 88% slump in those deals last year. Globally, investment-banking revenue declined about 50% last year at the largest lenders. 

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Spokespeople at Goldman, Morgan Stanley, and Bank of America declined to comment.

While some banks had sought to narrow the pay gap among bankers rather than cutting jobs as deals may bounce back in the second half this year, there could be more round of cuts in 2023, one of the people said. 

Managing directors were the hardest hit. Total compensations of directors fell about 30% to a range of $400,000 to $600,000, while vice presidents are less vulnerable with about 10% to 15% decline from last year, the people said. 

The drop is particularly prominent this year for Goldman which handed out records payout last year, or 20% above the market, one of the people said. 

Not everyone is seeing a big drop off in pay, however. Country teams in Australia and Korea and those in clean energy, merger and acquisitions have performed better, the people said. Banks are also keen to retain new, top-performing staff in anticipation of a rebound in deals. Citigroup Inc., for example, is raising compensation for its junior investment bankers by as much as 15%.  


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