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Junior bankers haven’t had a pay rise for a whole decade

Pay for junior bankers

Junior bankers' pay is looking a little stagnant

Everyone knows that junior bankers – analysts in investment banking parlance – earn a lot. Where else will you get paid £66k in your first year out of university and six figures (sterling) two years later? However, what fewer people know is that investment banks haven’t hiked pay for their juniors for at least ten years.

Over the past ten years, total compensation has risen 3.5% for second and third year analysts and 5% for first years. In real terms, therefore, the pay associated with junior banking roles in London has fallen. This doesn’t mean pay for individual bankers has stagnated – that increases annually as they rise through the ranks. It does mean a 22 year old in banking today is paid less in real terms than a 22 year-old in banking 10 years ago.

Needless to say, something has risen: salaries. The charts below, based on our archived pay data and the recent salary and bonus survey from recruitment firm Dartmouth Partners, show that junior bankers have had their salaries hiked considerably since 2016. At the same time, however, bonuses have been cut. Total compensation has barely changed at all.

Something else has changed for junior bankers though, and that’s their hours worked. In the past three years, most banks have made efforts to curtail the culture of 17 hour days in IBD. Some, like J.P. Morgan, are also love-bombing their juniors with words of appreciation and gifts of food. Is that enough to compensate for a decade of stagnant pay? Given the enthusiasm coming out of J.P. Morgan last week, the answer seems to be yes.

Contact: sbutcher@efinancialcareers.com

Comments (2)

  1. This is totally true across the bank, not just in front office.

    When I first started in recruitment in 2005 newly qualified accountants were getting 48-50k base salary from 30- 33k in big four/practice firms. in 2008 this rose to 55k and has stayed pretty much the same range (50-55k) as a starting base salary for all accountants in banks. Interestingly the practice firms have accelerated their base pay and an NQ ACA in practice could expect to be on between 42-46k base so the move into FS isn’t as attractive as it was.

  2. in 2006 GBP/USD was at 2.000.
    today GBP/USD is 1.30
    In other words, US I-Banks were willing to pay $125k USD to first-year grads in 2006, while they are only willing to pay $85k USD today. Thats huge deflation!

    the same goes for European I-Banks
    EURGBP was 0.6500 in 2006, while it is 0.9000 today.
    The same European I Banks have gone from paying 95k EUR in 2006, to 73k EUR today in 2016.
    Once again, huge deflation for junior London bankers relative to their global peers.

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