It’s still early, so we haven’t been able to confirm this with Credit Suisse, but Bloomberg has a worrying article this morning intimating the introduction of a whole new flat pay structure for the Swiss bank's junior investment bankers.
“Credit Suisse Group is likely to suspend its practice, an industry norm, of boosting pay automatically each year for analysts, associates and vice presidents within the investment- banking division,” Bloomberg alleges, after speaking with someone who has, ‘direct knowledge of the decision’. “While those [same] employees will get their regular annual salary increases, bonuses probably will be lowered to keep total pay flat from a year earlier,” it adds.
If true, Credit Suisse’s pay structure will represent a significant departure from the norm. Until now, it has been common practice to increase compensation year-on-year in steady and predictable increments for almost everyone at a junior level, with some differentiation for high and low performers.
This, for example, is what we understand (thanks to recruiters Cornell Partnership) 1st year, 2nd year and 3rd year investment banking analysts at Credit Suisse were paid last year:
Mean base £45k
Mean bonus £30k
Mean total compensation £75k
Mean base £51k
Mean bonus £53k
Mean total compensation £104k
Mean base £57k
Mean bonus £55k
Mean total compensation £112.5k
At analyst level, Cornell’s figures suggest a substantial (39%) increase in compensation in year 2, followed by a more modest (8%) increase in year 3. In future, the implication seems to be that only high performers can expect an automatic rise.
Bloomberg says Deutsche is thinking of doing something similar and freezing the top tier pay of all its VPs.
Meanwhile, separately, but in the same vein of persecuting junior people in M&A, Reuters suggests that BAML is also doing something new unique and putting “some of its analysts and associates in M&A into a general pool” rather than assigning them to any specific team. This sounds fine, unless ‘general pool’ becomes equated with working on multiple deals for multiple teams, in which case, it doesn’t sound fine at all.