First bank indicates bonus pool and it's down 9%
Investment bankers and traders at the Royal Bank of Canada can probably count themselves lucky. While the Canadian bank revealed today that profits in its capital markets unit fell 30% in the past year to $2.9bn Canadian dollars, bonuses in the unit appear to be down only 9%.
RBC doesn't break out its bonus pool, but it does break out the amount of deferred stock units allocated to its 'capital markets compensation plan.' Last year, there were 4,066,000 units allocated at a price of 128.95. This year there were 3,794,000 at a price of 125.22.
At the issuance price, last year's stock-based bonuses at RBC Capital Markets were therefore worth CA$523m ($387m). This year, they're down to CA$475m, a 9% drop.
It's conceivable that RBC will be making up for this with bigger cash bonuses, but it's also unlikely. While revenues were reasonably flat in corporate and investment banking and global markets in 2022, the return on equity in the unit plummeted from 18.3% to 11.3%.
Despite its tribulations, and despite being spotted trimming small numbers of junior investment bankers in London and NYC, RBC's capital markets division ended the year with more staff than when it began. 473 people were added to the unit during the year, an increase of 7%.
If RBC is hiring next year, it may want to add some new fixed income traders. Fixed income trading revenues at the bank were down 11% last year, while most banks (which have yet to report full year results) achieved significant increases in the first nine months.
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