“A bird in the hand is worth two in the bush”, as the proverb has it. Or as people in banking jobs might say, “a bonus in the bank is worth three in the deferred compensation scheme”. It was therefore great news for London bankers when the UK took advantage of Brexit to not only remove the bonus cap, but to consult on significantly reducing the proportion of bonuses deferred for senior staff designated as material risk takers.
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Another very important maxim for investment bankers is “whenever you’re given something, ask for more”. So the London banks are now (via their trade association) lobbying the regulators to get the new rules implemented immediately. This would be preferable to the alternative schedule under which something might be possibly published toward the end of the year.
In this lobbying, the banks make a reasonable point. Given the timing of the annual compensation round, they say it is quite unhelpful to make major changes while the packages are being finalized. Will the new rules be applicable retrospectively to bonuses announced in 2026 but reflecting performance in 2025? Might there be a farcical situation in which every bank tries to delay its announcement date?
On the other hand, it is also not great to have a situation in which the regulators are bounced into hasty decisions. The deferral rules were brought in to begin to prevent the “IBGYBG” (I’ll Be Gone, You’ll Be Gone”) phenomenon, where bankers did long-term deals, collected bonuses based on their projected revenues and never had to pay anything back when the losses showed up. Although most people in the industry agree that the deferral rules are now too strict, and don’t differentiate between different kinds of banking job, the original concept was not without merit.
Why are banks in such a hurry? Current predictions for the 2025 bonus year are not optimistic. Not only that, but hiring is at extremely low levels and few people are even looking for jobs; this is not a market in which paying bonuses to retain staff is at the front of many banks’ minds.
So why do they care? Partly out of a general distaste for being told what to do at all. Partly because there are some niches (particularly in fixed income trading, which is likely to be a big driver this year) where they’re competing with hedge funds and where the structure of compensation matters. But it seems likely that the biggest issue is simply one of consistency; in response to the lifting of the bonus cap, several banks have moved key staff to London from the USA, and it would be much simpler to be able to pay them on exactly the same basis.
Elsewhere, the experience with making stars out of sell-side analysts, particularly in the tech sector, turned out so badly in the dot com boom that it hasn’t really been tried again since the 1990s. But, proving once more that everything in finance repeats itself as soon as the last person to remember how it blew up last time has retired, the star analyst is back with a vengeance.
Wedbush Securities’ Dan Ives isn’t on the Extel All-America champions list, although his bright-coloured suits did win him a “Best Dressed On Wall Street” last year. And he has a very strong following among retail investors, having been (so far correctly) one of the biggest bulls of AI-related stocks.
Now, Wedbush is launching the “Dan Ives Wedbush AI Revolution ETF”, with the ticker “IVES”. Whatever you think of the move, you have to admire his strength of conviction, because if this thing fails, his name is all over it. If it succeeds, on the other hand, Wedbush have another problem, as they now have a player who’s arguably bigger than the team. There’s a reason that things like this are often taken as signs of a potential impending market top.
Meanwhile …
Hamza Lemssouguer is acquiring one of the real signs of the hedge fund big-time, as Arini Capital sorts out the paperwork to open an office in Abu Dhabi. It’s not hiring locally, though; it will be led by the current head of trading and staffed by existing employees relocating. (Bloomberg)
Meanwhile, BlueCrest is opening its Dubai office and “hiring aggressively”, partly funded by the profits made on a negative US dollar bet which has delivered 28% returns so far this year. (FT)
If you have enough frequent flyer miles to be worried about passing them on after you die, that might be a sign that you’ve spent too much time on business travel. (WSJ)
Jefferies is continuing to aggressively build the investment banking franchise, hiring Rich Thomas from Lazard to lead the global activist defense team. Chris Young, who had previously been in charge of activist defense, is leaving the firm. (Bloomberg)
Despite a number of high profile and fairly horrific kidnapping cases, crypto bros do not appear to be stepping up their security – they’re not even toning down the public displays of wealth. (NY Post)
Orlando Bravo is sceptical about whether AI is going to be all that useful in private equity – “we have lots of data from a private equity standpoint … — by geography, by deal, by customer — but you don’t need an enormous model for all that stuff and a lot of models in the past could predict that information” (Axios)
Piotr Damer has had a pretty interesting career; having started out as a fixed income sales trader, he’s one of the few bankers to actually do a coding boot camp and come back as a high frequency data developer, rather than just talking about it. And now he and his partner have given it all up to open a boutique hotel in Glenlivet. (The Press and Journal)
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