Morgan Stanley will be raising its annual bonus for top-performing staff on Thursday by more than 20% as shared by people with direct knowledge of the matter. This comes in light of how bankers in equity underwriting and M&A advisory businesses are expected to receive some of the highest increases due to the strong performances of those divisions over the past year. 

Staff within M&A and equity capital market (ECM) divisions are anticipating bonuses up at least 15% on the previous year and, in some cases, up 20% or more. However, other businesses whose performance was less stellar are likely to see flat or single-digit increases in their bonus pool. This coming Thursday will witness the ‘communications day’ which will kickstart the bonus season by announcing the payouts to top performers who will then receive their monetary compensation in February. 

According to a Bloomberg news report, the bonus payouts at Morgan Stanley are estimated to be lower than those at Bank of America Corp, which is planning to increase the bonus pool for investment bankers by more than 40%. Sales and trading operations at Bank of America could see a rise of more than 30% in bonuses on average.

Investment banks globally have been known to adjust their bonus pools according to business momentum. Higher bonuses function as a critical strategy to retain talent in a highly competitive environment. This was especially evident last year when salaries of investment bankers were hiked up by quite big margins with first year analysts salaries at Morgan Stanley rising by $25,000. Other investment firms also experienced similar hikes by $15,000 to $25,000 for analysts, associates and VPs such as Citi and J.P Morgan. Bank of America witnessed a hike between $5000 to $15,000 for its analysts and around $25,000 for its associates and VPs.

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