Prime Highlights:
- Bank of America plans to increase bonuses for its top-performing investment bankers and expand the overall bonus pool.
- The bank aims to strengthen its position in investment banking, retain top talent, and grow its share of fees over the next few years.
Key Facts:
- Top dealmakers may see their bonuses rise by about 20%, while mid-level performers could receive payouts similar to last year.
- The bank earned $130 million in fees from the Norfolk Southern transaction and expects revenue growth of 9%-10% in its markets business this quarter.
Background:
Bank of America plans to give higher bonuses to its top investment bankers to reward their work and benefit from increased deal activity this year. According to sources familiar with the matter, the bank also plans to expand the overall bonus pool for its investment banking division.
Industry insiders suggest that leading dealmakers could see their bonuses rise by roughly 20%, while mid-level performers are expected to receive amounts similar to last year. The bank is still finalizing its year-end compensation figures, which may be adjusted before announcements are made, typically in January.
Last year, Bank of America raised average bonuses by 10%, showing its focus on staying strong in investment banking. A recent filing showed the bank earned $130 million in fees from the Norfolk Southern deal, highlighting its success in big transactions.
The bank plans to increase its share of investment banking fees by 0.5% to 1% over the next three to five years to catch up with competitors like JPMorgan and Goldman Sachs. CEO Brian Moynihan said the bank is focusing on keeping top M&A talent, hiring in key areas, taking part in deals worth $5 billion or more, and growing its presence in middle-market transactions.
Market experts project that overall Wall Street bonuses for investment bankers and traders will rise for the second consecutive year, driven by increased deal volume and market volatility. The bonus pool this year is expected to reach its highest level since 2021, when both deal activity and profits peaked.
Bank of America expects its wealth management business to grow by 4% to 5% in the next few years. Its market business is also likely to earn 9% to 10% more in the fourth quarter.
By raising bonuses for top employees and expanding its business, the bank is boosting its investment banking position while keeping key staff.
