Goldman, JPMorgan award bumper bonuses to top bankers

Wall Street's biggest banks are facing cutthroat competition to hire and are paying more to recruit and retain top talent

Goldman Sachs and JPMorgan Chase, Wall Street's premier investment banks, this week informed staff of bumper bonuses for 2021, following a record-breaking year for Wall Street deal-making.

Goldman Sachs increased its annual bonus pool for top-performing investment bankers by 40% to 50%, people with direct knowledge of the matter said.

JPMorgan Chase, the largest U.S. bank, increased its annual bonus pool for top-performing investment bankers by 30% to 40%, sources with direct knowledge of the matter said.

JP MORGAN CHASE

JP Morgan Chase was one of the companies targeted by Andrei Tyurin. (iStock / iStock)

Ticker Security Last Change Change %
GS THE GOLDMAN SACHS GROUP INC. 328.58 +4.95 +1.53%
JPM JPMORGAN CHASE & CO. 131.27 +1.83 +1.41%

Goldman Sachs and JPMorgan declined to comment.

Record levels of deal-making and trading activities have driven profit at investment banks this year as economic stimulus measures helped propel stock markets globally to all-time highs.

Top performers in M&A advisory and equity capital markets enjoyed some of the biggest bonuses at both Goldman and JPMorgan, the people said.

Bankers in Goldman's M&A advisory and ECM divisions were handed an average 40% increase in bonuses with the very best performers seeing rises of 50% or more.

Goldman Sachs

Headquarters building of Goldman Sachs Group Inc. stands at 200 West Street in New York, U.S. (Photographer: Ramin Talaie/Bloomberg via Getty Images) (Getty Images)

GOLDMAN SACHS' PROFIT DECLINES BY 13% IN FOURTH QUARTER

The bank's partners were handed special stock bonuses, some of which amounted to multimillion-dollar packages, the sources said. Bankers who worked on some of the biggest deals of the year were among those who received the most generous awards, one of the sources said.

Wall Street's biggest banks are facing cutthroat competition to hire and are paying more to recruit and retain top talent. But that comes at a price.

In the latest quarter, non-interest expenses at the nation's biggest banks ballooned by tens of billions of dollars, hurting profit growth, earnings disclosures showed.

The cost of retaining talent put a dampener on record 2021 earnings from both Goldman and JPMorgan.

JPMorgan Chase reported last week that its non-interest expenses jumped 11% in the fourth quarter last year, largely due to higher staff compensation. Goldman reported a 33% rise in compensation expenses last year.

JPMORGAN'S FOURTH-QUARTER PROFIT DROPS 14%

JPMorgan boss Jamie Dimon said the bank would pay what it takes to retain the bank's top talent.

Jamie Dimon JP Morgan

JP Morgan CEO Jamie Dimon looks on during the inauguration of the new French headquarters of US' JP Morgan bank on June 29, 2021 in Paris. (Photo by MICHEL EULER/POOL/AFP via Getty Images / Getty Images)

"We will be competitive and pay and if that squeezes margin a little bit for shareholders, so be it," he told analysts.

Top executives at Goldman Sachs echoed those statements on Tuesday.

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"Our philosophy remains to pay for performance, and we are committed to rewarding top talent in a competitive labor environment," Chief Financial Officer Denis Coleman told analysts.

Morgan Stanley raised its annual bonus for top-performing staff by more than 20%, Reuters reported last week.