The law of small(er) numbers
Pay at investment banks is starting to fall, but not because politicians have capped it
“NAUGHTY or nice” is not a discussion investment bankers have with Santa before Christmas but one they have with their bosses early in the new year. The haggling usually opens with the boss saying what a tough year it has been and the bankers, often experienced traders and dealmakers, talking about how valuable they are. This year’s negotiations will be unusually tense. At stake will not simply be pay, an issue complicated by the introduction on January 1st of a bonus cap in Europe, but also jobs.
After peaking at the end of 2010, employment in the investment-banking industry has been declining steadily. Deutsche Bank reckons that the number of bankers employed by the ten largest firms will fall by about 3,000 in 2014, leaving the total 20% below its peak. Add in job losses at smaller firms and declines in support staff, and total worldwide employment in the industry may fall by 20,000 this year.
This article appeared in the Finance & economics section of the print edition under the headline "The law of small(er) numbers"
From the January 4th 2014 edition
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