Unlike senior bankers, mid-ranking bankers, and anyone higher than the lowest rungs of the hierarchy, analysts in investment banks don’t get paid in the spring of each year. They get paid in the summer: Typically, around July.
Now is the time, therefore, for analysts to start wondering how much they will make. European M&A was down 9% year-on-year in the first quarter and there hasn’t been much respite since, so they could be forgiven for thinking they won’t be paid much.
Logan Naidu, partner at recruitment firm The Cornell Partnership, says speculation remains a little premature but that bonus polarisation is probable. “We haven’t really heard anything [about analyst bonuses],” he says. “However, we’d expect there will be quite a few zeroes as banks seek to weed out the people they don’t really want.”
More promisingly, a fellow recruiter of analysts into M&A says compensation this year is likely to be on a par with compensation for M&A analysts last year. “There’s never much variation,” he tells us.
His pan-industry predictions are as follows:
First year analysts: £45k base, max £30k bonuses
Second year analysts: £50k base, £40-45k bonuses
Third year analysts: £56-60k base, £40-65k bonuses
If this comes to pass, it will be pretty similar to 2011, when M&A analysts purportedly received fairly similar amounts as bonuses. Pay will have plateaued.
It’s all a long way from the glory years of 2007, when first year analysts were reportedly receiving bonuses of £48k, 2nd years were receiving £65k and 3rd years were receiving £80k.
Also of interest this year will be whether banks move to end the practice of automatically increasing analyst and associate pay based on seniority.
Bloomberg reported in January that Credit Suisse was planning to end the practice of hiking analyst pay on a yearly basis: salaries at CS will still increase as individuals progress from analyst 1 to analyst 2, but bonuses will apparently be adjusted to keep overall pay steady from year to year. If no other bank follows, Credit Suisse analysts could be very disgruntled in a month or so’s time.