JPMorgan's Co-Head of Investment Banking Predicts Bonuses Will Decrease

Vis Raghavan of JPMorgan Chase & Co. has predicted that bonuses for investment bankers will decrease following a year of lackluster performance.

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The global investment-banking co-head of the firm, who is also responsible for Europe, the Middle East and Africa, stated in a Bloomberg Television interview at Davos on Wednesday that banks reward performance, so if the performance is not up to par, the compensation will not be either.
The year was a mixed bag for market desks, according to Raghavan. Commodities, rates, and macro trading had strong performances, while volatility-based equity trades were in demand despite a lack of enthusiasm for cash equities.

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The lender recently announced that their investment banking revenue for the fourth quarter was $1.4 billion, a decrease of 57% compared to the same period last year. This is similar to other Wall Street firms, leaving those in the dealmaking industry expecting a less than satisfactory bonus season. On Tuesday, Axel Lehmann, Chairman of Credit Suisse Group AG, cautioned employees to prepare for reduced bonuses after a "horrifying year" for the Swiss lender. Additionally, Bloomberg has reported that JPMorgan, Bank of America Corp. and Citigroup Inc. are all considering reducing their investment bankers' bonus pools by up to 30%.

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Raghavan declared that JPMorgan had achieved a "steady state" in regards to its presence in Europe, with all Brexit-related changes and reorganizations now finished. He noted that the UK must find a way to bounce back from the economic repercussions of its decision to leave the EU and promote a higher rate of workforce involvement, yet the country still remains a desirable investment opportunity.

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The executive reported that the majority of JPMorgan employees have gone back to their offices, which is part of the increasing pattern of Wall Street to reverse the flexible working arrangements.

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He commented that most of their staff had returned to the office, and that each organization must determine the optimal balance. He added that there was a noticeable energy in the air, and that it was beneficial to have people back in the workplace.