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Morning Coffee: European banks’ bonus illusion. You work 33% harder in investment banking than anywhere else

investment bank bonus

Working at a European investment bank might seem like a cross to bear right now. After all, they’re losing business to their U.S. contemporaries and most have slashed their bonus pools to the bone this year. How do their employees stick it out?

Well, mid-ranking bankers may have got stiffed with their bonuses, but a big uptick in salaries for senior staff means top performers could end up earning more than those working at American rivals. The difference in base may seem small – a director level employee at a London-based European bank gets a base salary of £175k ($212k) compared to £170k ($206k) at U.S. bank, according to Emolument data cited by Bloomberg. But the point is that by hiking up salaries, European banks have much less flexibility on pay and chopping bonuses doesn’t matter as much.

Bloomberg’s analysis shows that UBS has a compensation ratio of 40%, compared to 27.1% at J.P. Morgan (even if it does lump corporate bankers in with its investment bankers in its accounts), so pay is still a big drag for European banks. UBS might have cut its bonus pool by 17%, for example, but as we pointed out last week, it’s cash bonuses are only down 8%, more of the annual bonus is available in the first year and it’s still offering sign on bonuses to the right people.

Not that it’s all rosy at European banks. Plenty of people have already moved on this year so far and Alan Johnson, managing director of pay consulting firm Johnson Associates, says it’s not pay satisfaction that’s making people stay put, but a lack of jobs. “There are many people who would move if there are jobs they could get,” he said.

Separately, investment banking is still bad for you. About 25% of those in banking responding to a Banking Standard Board survey said that their job “has a negative impact on [their] health and wellbeing”. This is not news to anyone who has followed the various studies on the health destroying qualities of working brutal investment banking hours.

However, in a study of 13,000 college graduates on Poets and Quants, it’s that evident working in banking – and to a slightly lesser degree private equity – will require you to work much harder than just about everywhere else. Junior investment bankers work an average of 74.7 hours a week, it suggests. Stripping out private equity – which in the early years is just investment banking lite – this means you work 33% longer in investment banking than the nearest job (accounting). And, of the top six jobs for working hours, five were in the financial sector.

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Meanwhile: 

The two top earning hedge fund managers made $1.5bn each last year (Forbes)

Quentin Andre, a former Goldman Sachs MD, is Citi’s new head of equities structuring (Financial News)

Thomas Patrick, the global head of equity trading at Deutsche Bank, is likely take over its U.S. operation (Reuters)

Investment consultant, Cambridge Associates, has laid off around 50 staff as it tries to reinvent itself as an investment manager (WSJ)

Male financial advisers are three times are likely to engage in serious misconduct than women. Female advisers are 20% more likely to lose their job as a result (Bloomberg)

The Central Bank of Ireland doesn’t have the staff to deal with Brexit move requests (Financial Times)

BAML’s Ireland Brexit move: “Dublin is an emergency, a default option that the bank has.” (Bloomberg)

MUFG and Mizuho are heading to Amsterdam (Bloomberg)

London mayor says that a hard Brexit will benefit New York and Hong Kong, not other European cities (WSJ)

Brexit is great if you’re an M&A banker – $70bn worth of UK deals in the first quarter (Times)

Research analysts’ job prospects just got even shakier (Bloomberg)

Struggling to learn something? Just upload it into your brain (Telegraph)

Contact: pclarke@efinancialcareers.com

Photo: Getty Images

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