Bank of America has changed its cautious approach last year and is said to have raised its bonuses significantly

On the occasion of a second consecutive bumper year for Wall Street financial institutions, Bank of America has changed its approach to bonuses, significantly increasing the size of its prizes this year after exercising restraint a year ago.

According to people familiar with the briefing who heard the discussion briefing, Bank of America executives plan to increase the total bonuses of investment bankers by more than 40 percent. One of the people familiar with the matter said that for sales and trading businesses, bonuses can increase by more than 30% on average.

This means that bonus increases may even be higher than annual revenue growth in some sectors – and even declines in some sectors – and are clearly inconsistent with industry practice. The reason is that executives are focused on how the business has performed over the past two years, during which time many businesses are significantly more profitable than they were before the pandemic.

The sharp increase in bonuses comes against the backdrop of increasing competition for talent on Wall Street, but it also reflects a shift in the thinking of Bank of America's leadership. Last year, they showed caution, leaving the investment bank's bonus pool unchanged amid other rising costs and fears that a flurry of deals and investment banking businesses triggered by the Covid-19 pandemic might not last. The bank also set aside billions of dollars last year to prevent problems with lending to its sprawling consumer and corporate banking divisions.

But rivals such as Goldman Sachs and JPMorgan Chase have significantly increased their 2020 bonuses, making Bank of America more vulnerable to competitors poaching talent at a time when Wall Street continues to boom and the battle for talent heats up.

Last month, people familiar with Goldman's plans said the bank could be more generous in terms of bonuses this year, with bankers' bonuses increasing by 50 percent. Even for fixed income traders, bonuses are likely to remain stable despite their earnings cooling last year after a spike in 2020.

This article originated from the financial world