Banker bonuses rise 1.9% in Canada as firms look past slowdown

Canada’s banks are spending 1.9 per cent more on bonuses for fiscal 2022 than they did a year earlier, despite a dramatic slowdown in investment-banking activity, as they try to retain talent in the hope of a recovery in the year ahead.

The country’s six largest lenders set aside $19.4 billion (US$14.5 billion) for performance-based compensation in the fiscal year that ended Oct. 31. That marks a sharp slowdown from the 18 per cent increase in bonuses in fiscal 2021 and is far short of the five-year average of 8.2 per cent.  

Canada’s banks faced a difficult year in their capital-markets businesses, with initial public offerings and acquisition volumes plummeting from a record pace in 2021. There hasn’t been a single Canadian IPO over $1 billion this year. Still, top bankers remain hard to replace, so firms are reluctant to grow too stingy with pay.

The record pace of deals and bonuses in 2021 “was a bit of an anomalous event,” said Adam Dean, president of Toronto-based Dean Executive Search, which focuses on financial-services firms and asset managers. “To replicate that this year, even in the best of scenarios -- let alone one where we’re dealing with inflationary pressures and rising interest rates and an uncertain economic environment -- would be very difficult.”