Banks pay junior staff bigger bonuses in fight for talent

Bonuses for analysts, the entry-level grading at which graduate recruits spend their first two or three years in a bank, have increased by 150 per cent this year to about £15,000.

Directors, a much more senior position typically achieved in an employee’s early 30s, had their bonuses this year cut by about a third to £100,000.

The Times reports that the analysis by Emolument.com, the salary benchmarking website, showed a distinct shift in priorities from seniors to juniors.

Associates, the first step-up from analyst and typically held by people in their mid-20s, also enjoyed bonus increases averaging 21 per cent to £37,500.

Alice Leguay, chief operating officer of Emolument, said that banks were having to work harder to hire and retain young talent because investment banking was no longer the desirable career it was in the pre-crash years. “It’s perceived as being very uncool. It’s very unglamorous. The job has completely changed in the last ten years. There’s so much compliance,” Ms Leguay added. Young people who before the crisis would have flocked to investment banks were just as likely to seek jobs in technology or set up as entrepreneurs.

Vice-presidents, mid-ranking people often regarded as the workhorses of investment banking because they are experienced enough to take serious responsibility while young enough not to be paid huge amounts, took an average bonus cut of 24 per cent to £50,000.

The highest level, managing directors, suffered an 8 per cent drop in bonuses to £275,000, according to the research, which was based on 2,500 responses from front-office staff across most of the big investment banks including JP Morgan, Citi, Barclays and Credit Suisse.

At the top level, however, averages can be misleading because banks increasingly devote the money to fee-earning stars while routinely awarding “a doughnut”, a zero bonus, to their less fecund peers.

Most investment banks have earmarked smaller amounts for bonuses this year as a result of difficult market conditions. While 2015 was a bumper year for mergers and acquisitions, equity capital markets, fixed income and commodity divisions had a tougher time.

Only Citi appears to be paying slightly bigger bonuses this year, the survey found. Bank employees are typically told their bonuses between January and March and then paid a few weeks later.

While senior people are paid largely in shares deferred for some time and subject to clawback, juniors receive their payments largely in cash.

Entry-level analysts are typically paid £45,000, so the bigger bonuses have boosted their total pay packets from £51,000 to £60,000 in the space of a year.

The bonus figures in the study included allowances, payments introduced to senior staff by many banks as a result of EU rules outlawing bonuses of more than twice base pay.

Deutsche Bank has paid more than €2 billion in staff bonuses, despite the German investment bank making a €6.8 billion loss after its worst year since the global financial crisis.

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