The days grow shorter. A dusting of frost appears. The season seems to arrive earlier every year. Yes, it’s time for the annual speculation about banker bonuses.
And so there it was in Friday’s Financial Times, a big article declaring that banks would pay up to keep top performers despite weaker profits. The article appeared the day after Thanksgiving, when many bankers presumably were busy giving thanks for the good fortune of remaining employed in an industry that gave its shareholders a return on equity in the single digits. Even though major banks are restructuring, cutting staff and jettisoning businesses, pay for investment bankers is expected to rise.
Articles like this result from a perfect storm of shared interests. Bankers want to stoke fears of institutional ruin if they aren’t paid handsomely. Other bank officials, mindful of impatient shareholders and exasperated regulators, want to temper bonus expectations. And headhunters are happy to fan the flames, hoping to pry good candidates out of their seats or coax a lagging bank into a hiring spree.
Above all, reporters want a good story, and the fortunes of bankers and their employers remain a constant source of fascination, even envy. It’s not so different from speculating about the fate of a favorite sports team or a film star as Oscar season approaches.
News articles like these aren’t accidental. They usually start with a whisper to a reporter from a trusted source, perhaps with a leaked memo from the HR department to grease the journalistic wheels.
All it takes is one article to set others in motion, too, which helps every player in this grand opera. Other business newspapers will take up the issue and fuel more speculation. Then, clutching the news cuttings in their hands, bankers will storm boardrooms and confront miserly division chiefs and plead, threaten, beg and bargain for a very large stack of cash (no shares please). Headhunters will call senior bankers to tell them their people are in play and suggest they too should consider a move to greener pastures before they’re left alone on a sinking ship.
It’s great entertainment. That is, unless you’re a shareholder in a bank and forced to watch as a sizable chunk of your earnings are pocketed by the staff. In that case, your annual nightmare is about to begin.