Bonuses have been disappointing for most senior investment bankers on Wall Street, but firms are still feeling the pressure to keep their junior investment bankers happy.
After all, private equity firms, hedge funds and Silicon Valley firms still want to lure away their best and brightest. Junior investment bankers and even VPs have been looked after this year. So what do the biggest banks pay their best-performing associates and VPs?
Looking just at the top-quartile performers at bulge-bracket banks – Bank of America Merrill Lynch, Barclays, Citi, Deutsche Bank, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS – first- and second-year associates can expect their base salary plus bonus to add up to a figure in the $200k-$350k range, according to executive search firm Options Group. Top performing third-year associates can expect their total compensation to be in the ballpark of $275k-$450k, says Options Group.
“People at banks have gotten better at protecting the associate and VP levels, because in the grand scheme of things, they are relatively cheap,” said Alan Johnson, the founder and CEO of Johnson Associates. “Their comp was flatish from ‘15 to ‘16, but it will go up some in ‘17, because the banks will do noticeably better this year.
Meanwhile, top-performing vice presidents at these financial institutions should expect their annual pay package, including their bonus, to hit a minimum of $375k, according to Options Group. However, depending on a range of variables, top VPs could attain total compensation around $975k.
So while this wasn't be a banner year for bankers' compensation by any means, these figures indicate that VPs – and even associates – who avoid the chopping block by achieving top-tier performance will be just fine.
Pay consultancy Johnson Associates is predicting the first real uptick in bank compensation since 2009, a significant increase in the 15% range. Factors contributing to that pay boost include market volatility that drives a trading upsurge and interest-rate increases that improve spreads.
This year, for those working in front-office debt roles – including DCM, trade finance, project finance, corporate banking, FX, commodities and securitization – at large global banks, associates got a 2016 bonus ranging between 25% and 60% of their base salary, while VPs got a bonus in the 25%-75% range.
That’s according to Paul Webster, managing director and the head of Page Executive North America at recruitment firm Michael Page, who said that compensation for debt roles on the sell side was all over the map. From 2015 to 2016, compensation at French banks, which had a relatively good year, was slightly up, while the majority of other European banks were flat, he said. Japanese banks were slightly up, while the majority of U.S. banks were either flat or slightly up, but no more than 10% or so.
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