Junior banker bonuses in London have surged by 60% this year as firms have moved to stem an exodus of talent, with Goldman Sachs the biggest payer in the City, according to new figures.
First-year bankers at Goldman received a bonus of £64,500 over the summer, according to research by recruiters Dartmouth Partners, up by 130% on the previous year as banks have battled a burnout crisis in the junior ranks that has led to new perks and salary hikes across the sector.
All the major investment banks, which include Bank of America, Barclays, Citigroup, JPMorgan and Morgan Stanley have increased bonus payments for their analysts this year, according to the survey. Analyst bonuses are typically paid out in August, while those further up the ranks receive theirs in the first quarter of the year.
“Overall, analysts who have remained in the industry have been rewarded for their loyalty,” said Logan Naidu, chief executive of Dartmouth Partners, which recruits for junior and senior roles in investment banking.
Across the analyst population in the City, bonuses are up 60-80% this year, according to Dartmouth Partners’ numbers.
A focus on mental health and workload among junior bankers has come under laser focus this year after a leaked presentation by 13 Goldman Sachs analysts in March outlined 100-hour weeks and working conditions that one respondent described as “arguably worse” than foster care.
Banks responded by reinforcing existing policies on restricting work over weekends, recruiting more juniors and hiking salaries. First-year salaries in London have gone from around £50,000 to £60,000 at banks including Citi, JPMorgan and UBS, while Goldman and boutiques including PJT Partners and Perella Weinberg Partners are now offering entry-level pay of £70,000.
Goldman’s second-year average analyst bonus of £87,200 is 125% up on last year and ahead of all of its rivals. However, nearly every bank in the City has increased bonuses at this level by at least 50% on the previous year.
JPMorgan, one of the few investment banks to maintain a three-year analyst programme as rivals have fast-tracked juniors in recent years, paid £90,000 bonuses for third years. This number was £85,400 at Citigroup and £52,300 at Barclays.
Naidu added that simply hiking pay for junior bankers was unlikely to be a solution in the long term.
“While analysts appear generally content with both salary increases and generous bonuses, some remain unconvinced in the longer term,” he said. “It may delay their departure for a year or two, but there is a fundamental lack of excitement and passion for investment banking as a long-lasting career.”
Investment banks have hauled in a record $93bn during the first nine months of 2021, as M&A and equity capital markets activity has surged. In the third quarter, banks including Citigroup, JPMorgan and Morgan Stanley produced all-time highs in their M&A units, as dealmakers have cashed in on the need for companies to overhaul their businesses in the wake of the pandemic amid low interest rates.
At JPMorgan, Goldman Sachs and Morgan Stanley, compensation costs within their investment banking units have risen to their highest in years amid the deal boom. At Morgan Stanley, the $7.8bn put aside for compensation within its investment bank in the first nine months of 2021 is the biggest number since the glory days of 2008.
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