Wall Street's Record-Breaking Money Bonanza Despite the Pandemic

Stock Market Boom, Active IPOs and M&A
Record-High Commissions
Year-End Bonuses Considered for 40-50% Increase
Analysis to Prevent Workforce Attrition

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jaehee] Despite the COVID-19 pandemic, Wall Street investment banks (IBs) are set to hold a record-breaking money party. This is due to the booming U.S. stock market this year, along with active initial public offerings (IPOs) and mergers and acquisitions (M&A), which have driven investment banks' fee income to an all-time high.

According to Bloomberg on the 14th (local time), Goldman Sachs, a leading Wall Street investment bank, is reportedly considering increasing its bonus payments by 40-50% compared to last year. Following Goldman Sachs, JP Morgan, which earned record advisory fees this year, is also considering a maximum 40% increase.

This far exceeds the average bonus increase rate for Wall Street investment banks this year. According to Johnson Associates, a consulting firm based in New York, M&A advisory and traders are expected to see an average increase of 20-25% on Wall Street, while underwriting tasks such as stock trading are expected to increase by 30-35%.

Wall Street investment banks are unleashing unprecedented amounts of money this year as they earn record fees. With money pouring into the U.S. stock market, an unprecedented boom has been seen, and active IPOs and M&A have significantly increased investment banks' advisory fee income. According to financial information provider Refinitiv, from January to November 2021, the deal size encompassing IPOs and M&A in the U.S. reached $2.3 trillion (approximately 2,729 trillion KRW), marking an all-time high.

In particular, Goldman Sachs and JP Morgan have been confirmed to have earned among the highest fees among Wall Street investment banks. Goldman Sachs earned a total revenue of $10.6 billion from January to September this year, an increase of about 65% compared to the same period last year. During the same period, JP Morgan earned $9.7 billion, up 41%.

Some interpret Wall Street's record-breaking money distribution as a measure to prevent employee turnover. Earlier this year, Goldman Sachs, JP Morgan, and others had already raised salaries once.

Stephen Scherr, Chief Financial Officer (CFO) of Goldman Sachs, stated during an October conference call that compensation and benefits expenses for employees from the first to the third quarter this year amounted to $14.5 billion, a 34% increase compared to the same period last year. During this period, Goldman Sachs' total compensation, including salaries and bonuses, averaged $336,481 (approximately 398 million KRW) per employee.

This content was produced with the assistance of AI translation services.