Morning Coffee: Goldman Sachs bonus complaints & BNP Paribas' bonus warning. Life of a Citadel PM
If you thought soaring profitability and revenues were a shoo-in for soaring bonuses, sorry. As we noted a few weeks ago, this has not been the case for 2024. At Goldman Sachs, for example, profitability and revenues rose by 68% and 16% respectively in 2024, but spending on pay rose by 8%.
It seems that Goldman people have noticed.
“The bottom line for 2024 comp is this: the firm crushed it and a lot of people who made it happen were given cheap seats at the celebration," one informed the New York Post. "I was expecting more given strong earnings," said another. Another said people were "unhappy" and that, “It would seem that the good results are partly due to squeezing compensation.”
Goldman is not the only place with unhappy people. Citi, JPMorgan and Morgan Stanley have some too. At Goldman, though, the unhappiness has been magnified by the probable delight of CEO David Solomon and COO John Waldron, who were handed an extra $80m each over five years in retention awards shortly after the moderate bonuses for the rank and file were announced.
Solomon and Waldron's special payment seems to have contributed to the "frustration, anger and disappointment" at Goldman. “Of course, that is where our money went,” observed one equities trader there.
People at Goldman and at US banks in general may still be happier than at European banks, though. French bank BNP Paribas doesn't announce its bonuses until early March. When it does, there may be tears on the fixed income trading floor. Bloomberg is reporting that BNP is planning to lift its bonuses by only 5% compared to the double-digit increases that were at least predicted at US banks.
BNP's 5% increase will be focused on its equities traders and DCM bankers, implying that its macro and credit traders, who underperformed in the first three quarters of 2024, won't be quite so content.
Separately, if you were wondering what it's like to work for hedge fund Citadel, Micah Nance, a portfolio manager in Dallas who manages a book of technology and media stocks, has described his life to Business Insider.
Nance, who manages a team of nine analysts, says he's up each day at 5.30am to play tennis. He's in the office at 7.30am, and then he's home to have dinner with his family. Later in the evenings, though, he works again. "I'm reading, I'm reviewing, I'm responding to emails or ideas," said Nance, who likes being challenged. Yesterday was presumably a particularly challenging day.
Meanwhile...
Okay. Thanks for the nerd snipe guys. I spent the day learning exactly how DeepSeek trained at 1/30 the price, instead of working on my pitch deck. The tl;dr to everything, according to their papers:
— wordgrammer (@wordgrammer) January 27, 2025
HSBC seems to be closing its entire UK, European and Americas investment banking business. “We will retain more focused M&A and equity capital markets capabilities in Asia and the Middle East, and we will look to wind-down those activities in Europe, the UK and the Americas.” (Bloomberg)
SocGen is plotting an ambitious expansion of its fixed income operations together with a cash equity push that will see it launch a prime broking operation alongside its research partnership with AllianceBernstein. (Risk)
Citi hired Cameron Beale, a former 25-year JPMorgan veteran, Daniel Morison from Credit Suisse and Bertrand Delacour in equities. (Financial News)
Nomura cut 10 people in sales and trading. Mostly in London. (Bloomberg)
Barclays won't move its EU HQ from Dublin to Paris until 2027 at the earliest. (Bloomberg)
UBS is cutting jobs in Switzerland. The cuts affect both higher management levels and lower ranks. (Bloomberg)
Pay for bankers in India could rise 10% this year compared to 4% for bankers elsewhere in Asia. (Bloomberg)
Law firms still love billable hours. It helps that hourly rates for partners at top UK-headquartered firms have reached £1,500, with US firms’ rates as high as $2,000. (Financial Times)
Why you're better off becoming a financial advisor than doing the CFA. (Wealth of Commonsense)
Mike Mayo is still bullish on banks. "We see a new era of banking given what’s likely the most positive regulatory inflection point in three decades.”
Photo by Markus Spiske on Unsplash
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