J.P. Morgan and Goldman Sachs still pay their junior investment bankers the most, but Citi has hiked up bonuses for analysts, associates and VPs this year more consistently than any other investment bank. European banks, particularly Deutsche Bank, are lagging the pack.
The vast majority of investment banks have increased compensation for their analysts this year, largely by raising bonuses, but associates and VPs were much more likely to receive less in 2016, according to a new pay study by London-based recruiters Arkesden. It bases its figures on the salaries and bonuses of the bankers it places, and this is the second year it's produced an in-depth survey looking at bank-by-bank compensation.
The figures suggest that J.P. Morgan and Goldman Sachs are, generally, the most generous to their juniors, but other banks have also made an effort to prevent an exodus from the analyst pool this year. Barclays, for example, has reinvigorated the bonus pool for its analysts after cutting back across the board last year, and total compensation is up by £14.5k for second year analysts on last year. Deutsche Bank has also hiked bonuses at the analyst level, but its associates and VPs have lost out and it is consistently towards the bottom of the pack on pay.
Investment banks are under increasing pressure to keep their juniors in their seats. Not only has there an exodus of junior talent to the buy-side, but banks have been poaching M&A juniors from each other to fill the gaps. This year, bonuses for analysts have been increasing, but salaries have largely remained flat after the vast majority of banks increased base pay for their analysts by 20%+ in 2015. However, more recently investment banks have started offering buybacks - increasing salaries by 20-30% to stop their juniors leaving.
Still, there's a hierarchy of junior desirability in investment banks. If analysts are a prized jewel to be kept at all costs, most banks don't appear too concerned about upsetting associates with lacklustre bonuses. Every bank either kept bonuses flat or reduced them for associates this year. Arkesden's figures support an earlier survey by recruiters Dartmouth Partners, which suggests associates have not been paid well this year.
Of the U.S. investment banks in the study, Citi has consistently hiked pay across the board for junior and mid-ranking investment bankers, but it's still behind the likes of Goldman and J.P. Morgan in terms of overall pay. Bank of America Merrill Lynch has also increased pay for analysts and associates, but trimmed the bonus pool for VPs this year. Morgan Stanley has been most brutal to its bonus pool for junior and mid-ranking bankers among the U.S. firms this year. For senior VPs, its bonuses were down by an average of £25k year on year.
Deutsche Bank decimated its bonus pool for 2016 - variable pay was reduced by 80% and bonuses were scrapped for senior bankers entirely. However, the bonus pain at Deutsche started to be felt at VP level, with pay down by £12-16k year on year in the mid-ranks, according to Arkesden's figures. It's worth pointing out, though, that 90% of VPs at Deutsche didn't receive any cash bonuses at all this year, and deferred all of them entirely for 2016. Perhaps the figures below are a little generous, therefore.
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