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2022 has been a weird year to be an investment banker. Deal flow has slowed and fees have plummeted, but the long hours and mind-numbing work haven’t gone away... well unless you work at Credit Suisse.
Banks are trying to pivot after a record 2021. With interest rates near zero and companies eager to expand post-Covid, banks raked in record fees and profits in 2021, especially for their investment banking segments.
Bonuses paid out earlier this year reflected a record-breaking 2021, with Goldman Sachs outpaying most of their competitors.
We conducted a survey of Wall Street professionals and received over a thousand responses. Below is a summary of average global investment banking compensation.
To receive the full Wall Street compensation results (broken out by bank, division, etc) subscribe to Short Squeez and get the 17-page deck in the welcome email.
The general consensus is that 2021 was the last ‘good’ year for investment bankers for a while. Investment banking revenues are down 30-50% this compared to 2021, and banks are prioritizing different divisions to calm investors.
Investment banks typically rake in cash through advising on mergers and acquisitions. But deal flow has slowed in 2022 amidst a rocky economic outlook and rising interest rates.
Bank of America announced last month that, despite its investment banking revenue declining 47% in Q3, it won’t cut any jobs - for now. The bank told investors it will focus on its segments that produce recurring revenue rather than investment banking.
Goldman Sachs wants to focus on recurring revenue too, but it didn’t make the same commitment to spare bankers their jobs. The bank cut hundreds of jobs this fall- some workers found out they got fired when their badges didn’t let them into the office. Ouch. Both Morgan Stanley and Credit Suisse are also weighing layoffs as banks reshuffle their focus.
Goldman is also planning a massive corporate restructuring. The firm will combine its investment banking and trading divisions, and pair its consumer bank Marcus with its wealth unit.
Investment banking has changed significantly since the 2007-08 financial crisis. Compensation has declined in the subsequent 15 years because of stricter regulations. But this time, things feel different. Most bulge-bracket investment banks are also large, publicly-traded companies and investors want banks to prioritize steady, recurring revenue over inconsistent investment banking fees.
Banks are cutting back on their reliance on investment banking revenue, which is highly lucrative but volatile. 2023 could be another bleak year for investment banking, and firms want to weather the storm. Some think restructuring will lead to more layoffs and lower bonuses. Goldman’s investment bank could even go private again - the firm IPO’d in 1999. Investment banking ain’t what it used to be and the industry could change even more during a down year.
To receive the full Wall Street compensation results (broken out by bank, division, etc) subscribe to Short Squeez and get the 17-page deck in the welcome email.
Overheard On Wall Street is a finance media company. It started as a finance Instagram account in 2018, and has evolved into a primary outlet for education, career development, and smart discussions that pull back the curtains on modern finance, economics, and business for tomorrow’s generations.
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