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.