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In the productivity hierarchy of banking jobs, M&A bankers rank last

Only pretending to be cheerful

Pity the lowly mergers and acquisitions (M&A) banker, for he or she not only works stupidly long hours in the service of capricious clients, but brings in very low revenues for his/her bank in the process.

We know this because banking intelligence firm Tricumen has issued some new research on revenues per head by banking business division for the first quarter of 2013. We’ve published the full hierarchy below. M&A bankers come last. Credit traders and salespeople come first. If revenue per head were a measure of bankers’ beauty, the M&A banker might rank somewhere alongside Anne of Cleves, the fourth wife of Henry VIII who was deemed so unattractive that Henry was unable to consummate the marriage. Credit trades and salespeople would be up there with the beautiful Anne Boleyn.

Revenue per head matters in banking because it’s often a proxy for pay. Across the bank as a whole, most banks restrict compensation to 45% or less of revenues (eg. Goldman Sachs went for 43% in the first quarter). This being the case, Tricumen’s figures suggest that M&A bankers should each be earning an average of $135k while credit traders should command an average of $1m.

Obviously, it’s not as simple as this: there’s also the issue of capital requirements and the fact that fixed income traders have the potential to bring down entire banks, while M&A bankers are simply prone to running up huge lunch bills, but still…

Next time M&A bankers complain about poor pay, someone may want to point them in the direction of this page.

The banking job productivity hierarchy (measured in terms of revenues per head, Q1 2013)

1. Credit sales and trading: $2.3m

2. Equity capital markets: $2.2m

3. FX sales and trading: $1.5m

4. Rates sales and trading: $1.2m

5. Equity derivatives and convertibles: $1.1m

6. DCM and Securitization: $1.0m

7. Commodities sales and trading: $0.9m

8. Prime services: $0.8m

9. Cash equities sales and trading: $0.5m

10. M&A and advisory: $0.3m

Source: Tricumen 

Comments (6)

  1. You forget to mention the number of back office staff that are required to support a trading desk versus next to no back office for M&A… that balances the equation somewhat

  2. There are barely any costs for M&A/IBD teams (OPEs all charged to deals) vs the support functions required for S&T plus amount of capital tied up for trading

  3. There are barely any costs for M&A/IBD teams (OPEs all charged to deals) vs the support functions required for S&T plus the large amount of capital tied up for trading. Net profit per head is more relevant in any case, not revenue.

  4. You forgot to factor in the risk component of all those businesses compared to M&A – plus, agree with above, M&A requires far less infrastructure, middle and back-office functions!

  5. Kinda stupid article which misses the point as you can be a 1 man M&A team without any need for capital, expensive IT systems and the whole research and accouting back office functions that supports sales and trading functions… on a ROE point of view, M&A is probably the highest as the only cost are salaries, Microsoft office software, telephone and a photocopier.

  6. @ex-IBD and others – That’s a fair point, but it also seems that M&A bankers underestimate the amount of infrastructure needed to support their business (or at least that they complain about the back office costs allocated to them). Plus, in the new ‘integrated banking model’ aren’t M&A bankers supposed to be dependent on the bank’s lending and capital raising and trading arms to win deals in the first place? The lone M&A guy may be a bit of a myth.

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