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Europe’s top bankers are on course to fall further behind their US rivals as Brexit uncertainty, low volatility and rising shareholder pressure drag down bonuses, City experts warn.

Traders are already preparing for double-digit falls in bonuses after low volatility made it difficult to make money in 2017. Headhunters warn that those at European banks are more likely to be handed a “doughnut” bonus – industry code for nothing at all – in the coming months as revenues continue to lag US peers.

Jason Kennedy, chief executive of recruitment firm Kennedy Group, said the chasm between US and European-based banks would be wider than ever as European banks held back cash due to political uncertainty. He predicts bankers on Wall Street will be handed bonuses 15-20pc higher than those at European rivals this year, or 10-15pc more for those working at a US bank based in Europe.

That will differ by division, with US merger and acquisition (M&A) bankers in for the biggest windfall after the number of US-targeted deals reached a record high of 12,891 during 2017, according to Thomson Reuters.

Wall Street banks dominated the league tables for both European and US M&A last year, with Dealogic ranking Goldman Sachs, JP Morgan, Bank of America Merrill Lynch and Morgan Stanley as the top four advisers by market share on both sides of the Atlantic. EY’s Omar Ali said Donald Trump’s sweeping tax reforms would only “heighten the differentials” in the year ahead.

“Being a banker in the City and being a banker on Wall Street are only going to become more stark,” he said. “If you look ahead, given the US Tax Cuts and Jobs Act going through, Wall Street is likely to get even stronger.”

The post-Brexit drop in the value of the pound, meanwhile, has failed to convince foreign firms to take over UK rivals, with Dealogic data showing that the value of takeovers dropped to its lowest point in four years.


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