Investment banks in London pay new MBAs more than any other industry, and yet fewer than ever are entering the sector.
Students who graduated from London Business School’s MBA programme – which has historically accounted for 40% of business school graduates in the City – were offered an average of £115k ($162k) in total compensation to go into investment banking, according to its new employment report. And yet, just 8% of the 2015 class went into the sector.
Just to be clear, LBS suggests that this is a choice for MBAs – rather than banks recruiting few people. Instead the proportion of graduates going into consulting (33%) or corporate roles in technology companies (20%) is on the rise.
MBAs that have gravitated towards investment banking have gone for brand names – Goldman Sachs was the biggest employer with 9 new hires, while Citi hired 6 LBA MBAs and Credit Suisse took in five. This pales in comparison with the consultants – Mckinsey & Co hired 38 people from LBA this year, while Amazon took in 16.
Despite the higher pay packets on offer in investment banking, for the first time ever the same number of MBAs from LBS ended up in private equity. Investment banks paid average salaries of £80.9k plus a sign on bonus of £33.7k. Meanwhile, private equity companies offered average salaries of £76.4k and bonuses of £33.1k. Because of the larger bonuses, these were the highest paying sectors.
MBAs choosing to gravitate away from investment banking is nothing new, of course, but LBS has traditionally been a target for financial services firms. Last year, 12% of graduates choose investment banking.
The pipeline looks has swung even more towards technology – 28% of the class of 2016 interned at a tech firm, compared to 20% in consulting, 14% in private equity and 13% in investment banking.
Again, Goldman Sachs, Credit Suisse and Citi were the biggest banking recruiters.