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Analyst bonuses to be nearly halved

Analyst bonus time is coming around again and it doesn’t look entirely pretty. Early figures from the one top US bank that’s remained unscathed by the credit crunch suggest first-year analysts will fare the worst. Meanwhile, for the first time ever it seems analysts are set to receive some of their bonuses in stock.

First of all, here are last year’s figures – courtesy of recruitment firm The Cornell Partnership:

Y1 analyst: base salary (excluding sign-on) 38.5k, average bonus 125%.

Y2 analyst: base salary (excluding sign-on) 45k, average bonus 140%.

Y3 analyst: base salary (excluding sign-on) 50k, average bonus 155%.

And here are the 2008 forecast figures for the ‘top firm’, courtesy of another recruiter which wishes to go unnamed:

Y1 analyst : base salary (excluding sign-on) 37k, average bonus 70%.

Y2 analyst: base salary (excluding sign-on) 44k, average bonus 100%.

Y3 analyst: base salary (excluding sign-on) 51k, average bonus 150%.

Given the 2008 figures are for the one house that’s sidestepped the credit crunch (who could that be?), they could paint an overly rosy view of reality. With this caveat, it’s notable that first-year analysts look set to lose out, while third years appear on track for another good year.

Logan Naidu at The Cornell Partnership says most analysts are expecting bonuses to be circa 25% down this year, which isn’t great considering they’re being worked harder than ever. “We’re getting calls saying three people have left my team, my staffer has unrealistic expectations and my workload is unbearable,” he says.

Comments (30)

Comments
  1. Can someone please clear an issue up for me? Does a first year analyst constitute a graduate who’s been there a year, or is it someone who’s actually been off the grad scheme for a year?

    I only ask because I start in AM at a BB soon (admittedly not the one that has ‘sidestepped’ everything and I acknowledge I’m in AM not IBD), but bonuses were nothing like that for the graduates I spoke to.

    Concerned Graduate Reply
     
  2. 1st yr analyst is someone who has been working for 1yr as an analyst, after completing an undergrad degree (however some people have more qualifications), but still join through the grad scheme. As a 2yr analyst in IBD i can tell you that my bonus was 140% of salary in my first year, and most of my friends at other banks (who were ranked top) got roughly the same.

  3. Concerned, “first year analyst” hugely varies by firm. At places like Citi and Deutsche Bank, you spend the first 5-6 months training, where you are a nobody, a “graduate analyst”, and then in Jan/Feb when you finally start on a desk you become a 1st year analyst. Meanwhile at Lehman, etc where you start much straightaway on the desk as a 1st yr analyst and get paid 12mths later in the summer. And ABN Amro, HSBC etc where even though you’re just doing a rotational scheme you’re a 1st yr analyst from the beginning minus initial FSA training.

    The numbers seem way off though. A 1st yr analyst’s bonus being 125% of base is realistic as the above indicates its 48k. Personally I saw everyone here get 50-55k so thats not far off. HOWEVER, 2nd year bonus only 140%? That is complete rubbish. The majority of front office grads at end of 2nd yr analyst get a low 6-FIGURE bonus. About 250%. That I know for sure. OK this year places like Citi, ML, UBS which messed up catastrophically that didn’t happen, but at other places in normal times 04-07, most grads got 100-150k bonus end of their 2nd yr.

  4. As a clarification for my above post, I’m talking Sales & Trading where most 2nd yr analysts get 6-figure bonuses (), don’t know what its like with IBD. But makes sense the IBD progression nowhere as rapid as S+T – in IBD as a 2nd yr you’re still a Powerpoint/Excel monkey, in trading you can be making some serious P&L by then.

  5. Has anyone got any idea how much an IT person in a major IB can get as bonus in his first year?

  6. I think a bonus cut is only reasonable given the figures mentioned above.

    Do you guys really think, that a bonus of 100-150k (GBP!) is reasonable for someone out of school for two years?

  7. Henry, your definition of “normal” is interesting… To me, your “normal” sounds like abnormally high earnings at the top of a very optimistic market :-) Take the median between the trough at the end of the internet bubble and the top of last year, and then you might have some “normalized” figures…

    Value Investor Reply
     
  8. Henry – It surprises me you are so full of BS in all the threads here, 2nd year analysts getting low six figure bonus in Sales & Trading – which currency was that six figure bonus in?

  9. Ha, I’m showing your comments to 23-24yr old, now 1st yr Associates here, and they’re laughing that you don’t believe it.

    In January/February this year, plenty of grads got 100-150k bonus, GBP, at the end of their 2nd yr analyst period, in the top banks (minus Citi, UBS and ML) for Sales & Trading. That is not a lie. Yes, truth is 2005-07 has been top of the market and I know numbers were weaker before then, but that’s what it was last year – and not for superior / exceptional grads, easily where I am the majority got over 100k.

    Hopefully someone else doing front office at a top bank will confirm I’m not talking BS. Obviously if you’re not at a good desk or at a crunch-hit bucket bank you’ll think I’m lying.

  10. I have a friend in Equity Derivatives Structuring, got 240k bonus as a 2nd year analyst in February, but that was because he ended up responsible for VP/Director-level stuff. Still, this can happen if you’re on an understaffed team or get lucky with a deal. Most people I know got 80-140k though. Nearly all the 1st year grads got 50k-ish.

  11. Henry, I hope you are joking. I am an IBD associate in a top BB and believe me these figures (3Y analyst at 150%) are for GS and for a Top performer. Usually at analyst level you get around 100-125% on average. It could go up to 150-160% if you are a star and likely to jump one year.

  12. There is nothing funnier than seeing people think you’re lying. Particularly people in IBD, working twice the hours for measly pay. I had a dinner last night and IBDers jaws dropped. I got more than double my base as a 2nd year analyst, and almost triple it as a 1st year associate. And plenty did just as well. If you’re a 3rd year analyst and not getting 100k+ bonus then you should pack your bags.

  13. What kind of bonus can a 1st year FX Algorithmic trading Analyst (working in Technology) expect?

    FX Algo Trader Reply
     
  14. Henry is a b*** – why does he always comment on threads – he’s blatently a graduate recruiter with nothing to do – sad little man. Anyway, not sure what the point is in this article. All the inv banks will just convert their writedowns and losses into deferred tax assets and use them to offset gains over the coming years, making even higher returns than before and all your sad little lives will be filled with money again.

    Peter the Pauper Reply
     
  15. I think “Henry” is a recruiter in disguise, trying to keep up expectations.

  16. A lot of vitriol in this thread i must say…

  17. Grad – 18mths after starting – Trading – 55k. (18 mths due to disparity between grad start date and bonus date) this is fact.

    Also – as a grad about to finish 1yr – i expect about 70% of base and not much more – which is good

  18. anon’s estimation is much more inline with market. I’m afraid Henry does sound like a recruiter. Throughout his postings – it’s almost as if he has taken all what he knows from the films Wall Street and Boiler Room. Utter nonsense

  19. Grad – just finished 1st year – equity deriv trading. base 37K, what kind of a bonus can i expect given the condtions?

  20. agreed re Henry, he is just some back office recruiter, his bonus will be 7.99 this year

  21. Henry, I am not sure which bank you are working for…but I work for a leading BB firm and the bonuses can vary quite significantly from top performers and bottom performers. Last year bonuses for top quartile of senior associates were in low six figures GBP. This year is definitely more challenging than last year, and the bonuses are expected to be much lower for senior associates. So I am guessing have an expectation of 100-150k for a second year analyst would be very misleading.

  22. I am not a senior recruiter. I am writing these posts from a leading global investment bank. The admin slash tech people may be able to see that from my IP address. Anyway sounds like my bank caters for young people well and is meritocratic not hierarchical. There are plenty of young people in trading structuring and sales who maybe get lucky in making the right calls or on an understaffed desk taking on a huge project, which generates 10s of millions of P&L. Therefore them getting 6 figure bonuses regardless of seniority is how it should be. Thank god Im not at a bank which would suppress youngsters pay just because of their age or title despite them making millions. Otherwise I wouldnt have accumulated the glorious wealth I have thus far achieved.

  23. I work for HSBC and the bonuses were crap compared to what is being said here. Seems like we are being ripped off yet being made to work just as hard. Associates get around 50% of base.

  24. Mid-snr associate level (4y in work). Sales. I get 70k base + got 125k bonus last year, which from discussion with peers was ok. Would think that some TOP performers (prob trading exotics) could get significantly more than this, but in the larger banks there are usually (expressly documented or otherwise) compensation caps in place for everyone below the “career level” (VP, Director etc). Would be surprised if IN BULGE-BRACKET IB’s there are MANY with 300k. Within extensive network of colleagues at this level i know of precisely none. Hedge fund / PE is different, but even then, there aren’t many <5y experience types throwing it around at such shops.

    There is a lot of cr*p talked up by people, further hyped by the press, who know so little about what actually goes in the City it's untrue!

    As for this winter's bonus season – it's tricky to say. Given that banks are still hiring (therefore awarding guarantees) banks will have to pay SOMETHING to their "existing" employees to avoid mutiny come Q1 2009. I'd say down 20% to flat for Assoc level people; MDs always make sure they feed themselves; big haircut for VPs/Directors?

    All figures

  25. Kevin, HSBC is ridiculous. I have a friend in DCM who got a 15k bonus after 1yr as an Associate. They move people to Associate after 1yr and give you good international ops, but this comes at a ridiculous price given how low the pay is.

    Yet again I reiterate, I am completely serious with the money I’m talking. 6 figures for most 2nd year analysts in sales/trading at my firm. A very healthy 6 figures for 1st yr associates. As it should be – once you’re at that level you have the ability to make the bank millions. It seems at some firms they will cap you because of your lack of seniority despite this. At meritocratic banks, people got 6 figure bonuses age 23-24 last year. Obviously this year that will halve!

  26. Getting tired of IB and want to make a move. Anyone here knows what is paid at ratings agencies…Associate Director and Director levels + bonus

  27. Has anyone actually got their bonus for this year yet? One investment bank in the news is doing it monday.

  28. American BB bank. Been Hit hardest by CC. 1st yr analyst DCM bonus = 20-34k (FACT)

  29. I’m sorry to report that Henry was recently asked to take a hike from his “bulge bracket recruitment agency”, due to too much time spent fannying around on efinancial, and not enough time spent living parasitically off ibanks and talented individuals.

  30. you greedy lepers should hand your bonues back, given that joe taxpayer is propping up your insolvent level 3 assets.

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