There is a bonus boom in the City of London as bankers earn their biggest bonuses since before the global financial crisis.

Thanks to a record year for mergers and acquisitions (M&A), which exceeded $ 5,000 billion worldwide, banks are expected to earn more advisory fees than ever in their history.

JPMorgan Chase

JPM
, Goldman Sachs and Royal Bank of Canada Capital Markets could reward bankers with premiums 40-50% higher than last year.

Goldman Sachs made the most of his M&A advice, followed by JPMorgan. Reuters first reported the increase in bonus pools at the two US banks.

In the UK, banks made $ 3.5 billion advising on mergers and acquisitions, according to data from Refinitiv. This means that bonus pools are, on average, 20% higher than last year, according to PwC. Bonuses are usually announced before Christmas but paid out in the New Year.

As global M&A deals have jumped 63% to $ 5.3 trillion this year, according to Dealogic data, other types of financial deals will contribute to record bonuses at law firms, brokerage houses and other consulting firms.

This year is already a record for the private equity and venture capital sectors. UK tech firms have attracted more venture capital than ever in their history, with £ 26bn ($ 34.9bn) invested this year, according to data from Dealroom.

Rising equity markets and robust earnings helped fund these transactions. But so does the pandemic: Companies that reported losses in 2020 due to Covid-19 restrictions suddenly became attractive (and cheaper) takeover targets.

Just look at Square

SQ
Takeover of Jay-Z’s loss-making music streaming business Tidal X.

But larger transactions aren’t the only reason financial companies pay larger bonuses. Managers are terrified of the “big resignation” where workers leave stressful or monotonous jobs in search of a better quality of life.

A fund manager, speaking on condition of anonymity, has just resigned after his employer, one of the UK’s largest asset managers, said he had to return to the office. “They have to either let me work from home or offer me ridiculous money to go back to the office five days a week,” he said. The package they offered him, which would have been several hundred million excluding the annual bonus, was not enough.

Recruiters are struggling to fill vacancies at financial companies that don’t offer competitive packages, raising fears of a skills shortage. “It’s no secret that we are facing a sector skills shortage with the Covid, the Great Resignation and Brexit exacerbating this problem,” says Ann Swain, CEO of APSCo (The Association of Professional Staffing Companies ).

But even exceptional bonuses are no longer as attractive as they were before the financial crises. In October, the British Treasury decided to uphold an EU directive that capped bankers’ bonuses at 100% of their fixed salary despite Brexit allowing a change in the law.

Many bankers recall the public contempt for their bonuses attracted during the 2008 financial crisis. Reputation managers warned the new rich not to show their money this time around as it would attract public criticism.

The record bankers’ salary comes after a difficult year for many businesses that suffered losses or had to lay off staff as Covid-19 restrictions prevented their normal operation. Most other workers will start less well in 2022, as soaring energy costs and an inflation rate exceeding 5% are quickly wiping out any meager pay increases they might receive.

“This is not a golden economic age, so the very high pay of bankers right now only serves to reinforce the idea that the financial services industry is doing little to benefit society as a whole,” said Luke Hildyard, director of the High Pay Center, a think tank. He is one of many calling for more taxes on high incomes as governments try to pay off the pandemic.