Canadian banks reported the largest bonuses for their employees in 9 years

The largest Canadian banks’ bonuses were up by 18%, marking the biggest rise in 9 years, as they were fighting for the best talents amid capital markets activity boom.

Canada’s six biggest banks set CA$19.1 billion for performance-based compensation during their 2021 fiscal year. Such a number exceeds the decade average of 6.3% significantly. With the exception of TD Bank, all other six largest lenders raised their bonuses by the most since 2013.

The country’s banks have been benefitting from hot activity in capital markets for almost 2 years already. It all started with an early-pandemic gain in trading that pushed equity and debt financings higher and recently led to a wave of mergers and acquisitions. That trend combined with the forecasts of it remaining in 2022, has increased the competition among banks for top talents of the industry.

“The mood is optimistic, and bankers’ expectations are very high,” – says Lara Zink, chief executive officer of Women in Capital Markets. “The war for talent is real, and top specialists need to get compensated as part of these banks’ retention plans.”

National Bank of Canada and Scotiabank reported the largest bonus increases. Meanwhile, TD Bank showed the lowest results.

The combined annual revenue from banks’ capital-markets operations rose by 3.3% and reached CA$32.7 billion by October 31. Underwriting and advisory fees were up by 22% to a record CA$6.78 billion. At the same time, trading revenue was down by 12% to CA$14.6 billion.

“When the pandemic started there was only one message and one goal: we need to survive,” – Adam Dean, president of Dean Executive Search, says. “Nevertheless, this year, the banks’ deal activity has peaked, people are working extremely hard and dealmakers believe that if ever there were a year to pay well, it’s this year.”

The total net income for the banks went up to a combined CA$57.7 billion, marking a 40% rise from the previous year and 24% from fiscal 2019. Total revenue rose by 3.3% from fiscal 2020 and by 6% from 2019.

According to Bill Vlaad, president of Toronto-based recruitment firm Vlaad & Co., banks try not to be restrained on pay not only because they are afraid that their talents may switch to their rivals, but also because workers are leaving the industry at a record pace. He says the industry’s attrition rate in 2021 may reach double digits, which is much higher than the average results.

Some of them may leave their job because they are tired of long hours of working at home without the possibility to travel and use expense accounts. Meanwhile, others understand they can make it known that they’re open to working for different firms, and they can easily find a new job.

“Whatever their goal is, they’re right,” – he said. “In 2021, the power is certainly in employees’ hands.”

 

 

Leave a Reply

Your email address will not be published.