Royal Bank of Scotland may not look like the best place to start your investment banking career. The bank has just unveiled the latest in a long line of deep cuts that will reportedly lead to 14,000 of its 18,000 investment banking employees being shown the door.
If you're the sort of young banking analyst who's being hotly pursued in the current market, it might seem advisable to jump out of RBS before you're pushed. After all, juniors in investment bankers are being coveted by the buy-side and banks are attempting to replenish their depleted teams.
However, RBS's juniors are reluctant to leave. One RBS analyst we spoke to said that morale within the bank has been seriously dented by recent news of impending redundancies but juniors in advisory functions are still being looked after well.
For a start there’s the pay. As most investment banks have increased salaries to stave off competition from the buyside, RBS has been forced to keep pace. RBS pays “market rate, if not slightly higher” says one analyst and there’s likely to be a 10% salary increase soon.
Figures from salary benchmarking company Emolument.com suggest that RBS is unusually generous with analyst salaries, but this is offset by smaller bonuses. Salaries for analysts at RBS were £51k on average, compared to a £48k average across the sector, but bonuses were just £4k.
Certainly, few juniors have left in recent months. In the UK the only recent junior departures have been Patrick Kah Mun Hui, an FX trader, and Erik Derwort, an analyst in the FIG division who moved to Barclays in February.
But it’s not all about the money. One debt capital markets analyst we spoke to says that the deal flow at RBS means he’s still very busy and his role is comparatively safe. Most UK junior bankers tell us that the cuts are expected to hit global transaction services and credit trading functions, while those in advisory functions are being well looked after.
RBS has, however, curtailed the number of graduates it takes on. At its pre-crisis height it was hiring over 400 graduates for its investment bank, a figure that shrank to 100 in 2013 and 50 people last year, according to sources close to the situation.
But RBS hasn’t “changed its proposition for analysts” suggests one junior. The bank still ensures analysts get more deal exposure than larger banks at which the hierarchy is more rigid.
For juniors, the best thing about RBS is that it doesn't shoehorn its young hires into one business area immediately. Instead, the first year is spent on four rotations around either the investment banking division or markets functions before settling in a particular area of expertise.
“The chance to gain more breadth of experience through these rotations is a real selling point,” enthuses one analyst.
RBS may not have the sway of Goldman Sachs, Morgan Stanley, J.P. Morgan et al, but it’s no death knell for your investment banking career.
"This is a good market for us junior ranks, but I still think people will only move for the right opportunity," says one analyst. Juniors are less interested in so-called "safe harbour" employers than in good career prospects, he added.