How much will you really make as an analyst or associate in the investment banking division (IBD) of a bank in London in 2019? And which banks pay more (or less) than others?
London recruitment firm Dartmouth Partners has released its salary and bonus survey for banks in 2019. As ever, it confirms that working in M&A or corporate finance can be a very lucrative (if sometimes gruelling) career. In the first year out of university new hires can expect to make £74k in total compensation. Six years later, as senior associates, they can expect to make £225k.
Logan Naidu, Dartmouth Partner's CEO, says analysts and associates have been kept happy this year. If anything, the difference between pay for top and bottom performers has decreased - at this level, it's been about keeping a happy medium.
Analyst salaries and bonuses
Dartmouth's figures for analyst salaries and bonuses in years one to three suggest the U.S. banks generally pay a lot more than the Europeans. Figures aren't always entire comparable at this level, however, due to differing payment schedules between banks.
During your first year in the investment banking division of a major bank, your salary will be £50k. Fixed pay is remarkably uniform at this level. Your bonus will be around £38k for the full year, but European banks with different payment schedules just give you a six month bonus to tide you over. Bad luck.
In the second year of your investment banking career, you’ll get a pay rise. Your salary should rise 10% (unless you’re at Goldman or UBS) and your total compensation (salary plus bonus) should rise to over £100k. European banks pay less. U.S. banks pay more. Citi pays the most – but this looks like a one-off after the bank paid its second year analysts a top-up to prepare them for a new summer payment cycle.
By year three as an analyst in an investment bank (aged around 25), you should be earning total compensation of between £113k (UBS) to around £125k (Credit Suisse or JPMorgan). Again, Citi looks like a wild and crazy outlier, and again this is due to the bank’s one-off change in its payment cycle - it's not forever. Sorry.
Associate salaries and bonuses
At associate-level, the discrepancies in bank-by-bank pay become clearer. The exception to this is the associate 0 year, when analysts transition to associates. Analysts are frequently paid bonuses at a different time of year (summer) to associates (winter), which means that associate 0s are paid a ‘stub’ bonus to keep them going during the 18 hungry months since their last analyst bonus and their first real associate one. To make matters even worse, associate 0s who join after an MBA qualification also get a sign-on bonus...
By year five of your career in M&A at a leading bank, you’ll be a proper ‘first year associate’ At this level, you can expect to earn around £160k. – More if you have the very good luck to be at Bank of America.
As a second year associate you can expect to breach the £200k threshold if you work for a U.S. bank, but to lurk below this if you don’t.
And, finally, as a third year associate, you might be expected to hit £225k. While all of this will undoubtedly sound very appealing if you’re a graduate in another industry on £35k, there are two things to bear in mind. Firstly, you will work a lot harder in an investment bank (think 80 hour weeks+, late nights and some weekends). Secondly, only the brave survive. – It’s not unusual for at least 50% (often more) of an analyst class to drop out by the time you’re into associate level. Getting into a bank is hard. Getting to these pay levels is harder still. Only the brave.
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