Operations and risk staff appear deluded about bonus expectations

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Much like their front office counter-parts, people working in middle office and operational roles in investment banking are optimistic about this year's bonus payments. Unfortunately for them, this may be a little naïve.

Robert Walters has surveyed 1,000 professionals working in compliance, finance, operations and risk functions within investment banks. Of these, 88% are expected a bonus of anywhere between 10-50% and three-quarters are also anticipating a pay rise.

Those working in operational functions may be in for a fall. Aside from the fact that some firms have made redundancies in this area, while others have nearshored to locations like Glasgow and Bournemouth (see JP Morgan, BarCap and Morgan Stanley), tepid quarterly results suggest pay is going to be down anyway.

"On the whole, people's perceptions of bonuses outweigh what will happen in reality," says Mike Hartwell, managing director of operations and finance search firm Hartwell Buck.

"After lousy bonuses this year, a lot people have been told by their line managers that expectations are good for 2010. Unfortunately, as Q2 and Q3 results show, the bonus pool is shrinking. There's going to be a lot of disappointed people and therefore lot of movement in the new year."

This, of course, depends on there being opportunities for them to move to. Operations staff in vanilla areas - ie, those nearshored - will struggle, suggests Hartwell, while there's still healthy demand for more exotic product areas.

Similarly within risk, has been perceived as a hot area to work for a couple of years now, candidates' bonus expectations are hampering what little appetite banks currently have to recruit.

"Base salaries have increased substantially over the last year in risk, by between 20-30%, but banks are still struggling to recruit because of optimistic bonus expectations," says Priya Mariannie, senior consultant, risk at PSD Group. "Clients are concerned that if these don't materialise, they'll lose a lot of key employees in the new year."

Around 40% of respondents to Robert Walter's survey expected to move post-bonus, but the majority of these (56%) said the motivation was career progression.

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