In the popular imagination, a lot of bankers are very rich and many are millionaires. The reality is, however, that if you work for a British investment bank your chances of earning £1m in any particular year are low. Very low.
At Barclays, 428 people earned more than £1m last year. The bank employed 23,992 investment bankers. Even assuming all the new millionaires at Barclays were in the investment bank (which they almost certainly weren’t), this puts the likelihood of earning £1m at Barclays’ Investment Bank at 1.8% – maximum.
The chance of earning £1m is even lower at RBS. RBS is 82% owned by the British government and compelled to be a ‘backmarker’ on bonuses. Last year, 93 of its employees earned more than £1m. Assuming, again, that they were all working in the investment bank, where RBS employs 11,200 people, this puts’ RBS bankers chances of earning seven figures at 0.8% at the very best.
While you have very little chance of becoming a millionaire working for Barclays or RBS, you have greater likelihood of becoming a ‘high earner.’ The top 1% of earners in the UK are earning £150k a year. Neither Barclays nor RBS break out how many people earn more than £150k specifically, but both banks break out their numbers of quarter-millionaires, or people on £250k+.
At RBS, 1,950 people earned more than £250k in 2012. At Barclays, 3,778 did. This puts investment bankers’ chances of becoming quarter-millionaires at 16%, (maximum) at Barclays and at 17% (maximum) at RBS.
Under former Chief Executive Bob Diamond, Barclays was known for its generosity to a handful of senior investment bankers. Not any more. Under new chief executive Antony Jenkins, Barclays has cut the number of its employees who earn more than £5m by 70%. Barclays also said last week that it wants to pay in the lower quartile of banks. However, if it wants to rank down with RBS, Barclays may have to cut pay even harder still: buried in last week’s remuneration report was the claim that 40% of RBS’s bankers who were eligible for bonuses in 2012 received nothing at all.
So – yes, there are millionaires at British investment banks. But they’re a dying breed.