Bad news: the biggest pay rise on offer in financial services in 2015 is likely to be, on average, just 3.2%. Even worse, the sector where these larger salary hikes are available is life insurance.
2015 will be a year when compensation as a whole across investment banking remains ‘stable’ on 2014, according to new research by Mercer. 85% of the banks it surveyed said they don’t expect much change in base salaries, while a mere 20% said that they anticipate bigger bonuses this year and then it will be in investment banking, private equity and private banking. Predictably, trading floor bonuses (and fixed income bonuses in particular) are expected to shrink.
Fortunately, however, pay is being boosted in other ways. 40% of banks have now introduced role-based allowances. These are offered as part of fixed pay to help mitigate the EU bonus cap. Another 10% intend to offer them this year.
In October, the European Banking Association attempted to clamp down on these allowances, but the one glimmer of pay optimism is that Mercer suggests “very few” banks who introduced role-based allowances intend to eliminate them.
The biggest pay rises across the financial sector globally are likely to be within life insurance, it says, followed closely by property and casualty insurance and then ‘control functions’. Still at least Mercer suggest pay is heading up for bankers, albeit by a mere 2% or so.