If you’re an analyst in an investment bank, you may be about to be paid. Not all analysts, not all investment banks. But some. And some banks have been having a good year, which should be reflected in juniors’ pay.
As the chart below shows, most big banks have had an exceptionally good six months in equity capital markets, an acceptable six months in debt capital markets and a more varied first half to the year in M&A. If you’re an M&A analyst at Bank of America and you’re receiving your bonus in August, you can expect to be paid well based on the fact that first half revenues were up 38%. If you’re at Credit Suisse, it’s less promising: first half M&A revenues fell nearly 9%.
Here’s the nub though: not every analyst is paid in August. Once upon a time, all banks paid their M&A analysts in August, but nowadays most U.S. banks pay their juniors at the start of the year along with everyone else. So too do the larger Europeans. “The U.S. banks typically pay analysts on a January cycle,” says Adam Cairns, managing partner at search firm Arkesden Partners. “- It’s the Europeans that usually pay in the summer.” Recruiters say independents like Moelis & Co., Evercore, Greenhill, Rothschild and PJT partners all typically pay in August. RBC Capital Markets is said by recruiters to have paid generous analyst bonuses in London at the end of last week.
But should you want your bonus now rather than in January?
Not necessarily. The good news is that demand for junior M&A bankers is pretty buoyant. Cairns says boutique M&A firms are extremely keen to hire from banks this summer. Andy Pringle at recruitment firm Circle Square says it’s turning out to be a “crazy year” for junior banker hiring. Banks may therefore feel obliged to pay well their juniors well this August simply to retain the staff they’ve got. On the other hand, M&A fees could pick-up as the year progresses. UK M&A has been spurred by the decline in the pound, although William Vereker at UBS is predicting a global slowdown amidst high valuations and uncertainty over monetary policy as the year goes on.
Overall, Cairns suggests M&A analysts who receive bonuses in the next few weeks will be the unlucky ones: “The bonus pool is decided based upon the completion of deals. With a lot of this year’s deals still being executed, it could be better to paid later in the year.”