European bankers brace for job cuts, smaller bonuses in 2024
Global economic concerns and geopolitical uncertainty have dampened the spirits of bankers from London to Frankfurt. Financial experts predict a sluggish year for deals, modest bonuses, and significant job cuts in 2024. Fabrizio Campelli, Head of Corporate Bank and Investment Bank at Deutsche Bank, stated, "2023 will ultimately be one of the lowest corporate finance fee pools in modern history."
Global economic unease and geopolitical uncertainty
The $2,669 billion in global deals this year is the lowest since 2005, and the $616 billion in deals across Europe, the Middle East, and Africa is the lowest since 2004. Banks are also worried about profits being impacted by stricter regulations, such as the 'Basel Endgame' capital requirements set to be implemented by global regulators from 2025. Ronan O'Kelly, a partner at consultant Oliver Wyman, said, "Overall, the outlook for the next few years for banks is flat revenue."
Downturn in corporate dealmaking and tighter regulations
To combat the downturn, banks have resorted to cost-cutting measures, leading to job losses in this people-intensive industry. Barclays is considering cutting up to 2,000 back-office jobs, while Lloyds has put 2,500 jobs at risk. Major headcount reductions are expected at UBS and Citi amid significant restructurings. However, workers' unions argue that banks are exaggerating their issues after some reported record profits this year. Dominic Hook, a national officer at Britain's Unite, expressed frustration with banks "pleading poverty."
Job cuts and cost-cutting measures
Bonuses for this year are likely to be disappointing due to the lack of activity. However, some banks may offer more generous bonuses to retain talent in case of a sharp rebound. Goldman Sachs is among those considering increases. Vis Raghavan, CEO of EMEA and Co-Head of Global Investment Banking at JP Morgan, said that "at relatively quiet times like these, it is still important to have the best people who are ready for when the market picks up again."
Disappointing bonuses
Geopolitical tensions and upcoming elections in the United States, India, and the UK next year are causing corporate inertia. However, market volatility can benefit trading teams and provide a much-needed boost for banks in 2024. Oliver Wyman's O'Kelly mentioned that "volatility in the wider world... can benefit the (trading) business in terms of client demand, risk spreads."
