The 2010 'Doughnut' Bonus League Table


Speculation is already mounting about the firms that are likely to pay the most 'doughnut' bonuses (i.e. nothing) to staff this year-end.

Two years after the worst of the financial crisis, some firms have emerged in a more healthy state than others and are, of course, in a better position to pay out bonuses.

Clearly no firm will pay out all doughnuts, and some staff in all firms will get zero bonuses.

Detailed below is a league table based on our estimates of how likely staff are to receive a doughnut, together with a brief note of our reasoning (the higher the position of the firm, the higher percentage of likely doughnut bonus recipients among the staff).

1. WestLB - it's tough to pay bonuses at a time when your firm's very existence is at issue.

2. Commerzbank - still refocusing its business away from risk and geared more towards the German domestic market. Not a recipe for investment banking bonus heaven. Then again, the staff are used to doughnuts.

3. Standard Bank - currently restructuring its operations after an ambitious period of growth failed to deliver the expected returns. Several staff will have to accept doughnuts as the price for still being in a job.

4. ING Wholesale Banking - seems to have an investment banking unit only because some (mainly Dutch) clients expect it to. It's been many years since it was regarded as a decent bonus payer. Doughnut bonuses will not be that unusual.

5. Royal Bank of Scotland - investment banking revenues are under pressure, and CEO Stephen Hester has already confirmed that lower profits means lower bonuses. Politically, it will be difficult for this UK state majority-owned firm to push the bonus boat out this year-end, and many staff won't be surprised to get doughnuts.

6. HSBC Investment Bank - never overly-generous on the bonus front at the best of times, the bank will be under pressure from the UK government to show bonus restraint this year-end, and staff should expect more doughnuts than usual.

7. Credit Agricole - usually much closer to the top in a league table of this nature, but the firm's investment banking unit has performed better this year than many expected. However, doughnut bonuses will still feature.

8. BNP Paribas - had a mixed year in investment banking this year, and has a bit of a reputation in the doughnut bonus stakes. The bank has been successful elsewhere this year, and will be less concerned about alienating some of its investment bankers.

9. Bank of America Merrill Lynch - the combined unit hasn't delivered the expected returns, and Bank of America will keen to prove to the Obama administration that it is showing restraint on the bonus front. Staff should expect rather more doughnuts than usual.

10. Standard Chartered Bank - no-one joins this firm because of the bonus payouts. But the wholesale banking operations continue to do well, and staff should expect fewer doughnuts than usual.

11. Macquarie - The 'Millionaires Factory' seems to be temporarily closed, but the firm will realise that it will need to do better on the bonus front this year than last if it is to retain key staff. The bonus pot will be conservative, though, and key staff will receive a significant share. More doughnuts than usual for the rest.

12. Wells Fargo - 2010 has been a year in which the firm has been quietly rebuilding its investment banking franchise (much of it inherited from Wachovia). Doughnuts will feature, especially in back office, but not as many as you might imagine for this cautious firm.

13. Nomura - struggled to make the most of its (fairly) recent Lehman acquisitions. Although the 2-year Lehman bonus guarantees are consigned to history, the firm is playing a long game and will be keen to keep as many of its staff as possible. Some support staff are likely to get doughnuts, as will front office types being given a strong message.

14. Morgan Stanley - rumours abound that some of the firm's new fixed income hires have disappointed and are likely to bag doughnuts this year-end, but the reality is that many will be on guarantees anyway. In other cases, however, Morgan Stanley will award doughnuts where poor performance merits it.

15. Credit Suisse - beefing up its payrolls this year seems to have been a hell of a gamble, especially as the firm has a relatively small appetite for risk which has adversely impacted revenue growth. The firm will not think twice about paying out doughnuts as it reviews its cost base.

16. Societe Generale - relatively large subprime writedowns and that $7bn rogue trading scandal gave SocGen the opportunity to circle the wagons around Paris and pull out of investment banking had it wanted to. But the French bank stayed the course, and the majority of staff are expected to get decent bonus payouts this year-end. Doughnuts are expected to be strictly restricted to non-French employees, mainly in support areas.

17. UBS Investment Bank - a difficult comp round approaches for UBS Investment Bank. On the one hand, the firm has been busy hiring throughout the year, and will want to demonstrate its continuing commitment to investment banking. On the other, the investment banking unit lost money in the third-quarter and revenues remain under pressure. Expect a Swiss solution, though, and there won't be too many doughnuts this year (meaning that although most staff will get something, many will feel shortchanged).

18. Citi - like UBS Investment Bank, Citi has been rebuilding its investment banking business this year and will be keen to still be perceived as a player. Never the best bonus payer, Citi staff will fear the worst after a challenging year. They could, however, end up being pleasantly surprised.

19. JPMorgan - no firm with Jamie Dimon ultimately in charge will be huge bonus payers, but JPMorgan's ability to manage its cost base (and its knack of recruiting decent staff) will mean that doughnuts will be few and far between. Support staff, however, may discover that their awards aren't overly generous.

20. RBC Capital Markets - RBC's investment banking unit continues to do well, and doughnuts will only rarely feature.

21. Rothschild - the firm plays to its strengths and only hires top talent. Doughnuts are unusual.

22. Lazard - like its close rival Rothschild, Lazard only plays where it stands a good chance of winning and only hires winners. Potential doughnut recipients are usually weeded out long before year-end.

23. Deutsche Bank - although not the big bonus bank it once was, Deutsche has got its bonus mojo back of late. Although there will remain huge disparities between the have and the have-nots, doughnuts are thought likely to be relatively few and far between.

24. Jefferies & Co - the firm has been busy increasing headcount this year, and the mood remains positive. Many staff feel that Jefferies is on the verge of the big time, and management won't want to spoil the positive mood by shortchanging employees at year-end. A doughnut bonus will mean it's time to move on.

25. Barclays Capital - expert at getting shot of poor performers before year-end, the firm will equally ignore pressure from the UK government to exercise bonus restraint. Although revenues have been more difficult to come by this year, BarCap staff can look forward to decent payouts and there won't be too many doughnuts in the Diamond Kingdom this year-end.

26. Goldman Sachs - if you are still at the firm come bonus payout time, you'll get paid out. The weak will have already been weeded out with ruthless efficiency.

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