Banks slash juniors’ pay

Tim Wallace
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INVESTMENT bankers’ pay tumbled further this year, with junior staff’s bonuses plunging on poor market conditions, a lack of competition in the sector and sustained pressure to avoid public outrage.

Average bonuses fell 25 per cent on the year for analysts in the investment banks’ merger and acquisitions (M&A) units, following a fall of 10 to 20 per cent the previous year, according to Dartmouth Partners.

But base pay increased slightly, leaving total incomes down an average of 20 per cent for the young trainees, who are typically recent graduates in their first three years at the banks.

That leaves the average first-year analyst on £65,000, with a £45,000 base salary and £20,000 bonus; second-year staff on £83,000, with a £51,000 salary and £32,000 bonus; and third-years on £104,000, with a £58,000 salary and £46,000 bonus.

The highest paid third-years work for Barclays and Morgan Stanley, on £111,000, while the lowest paid are at UBS on £96,000.

Between 10 and 20 per cent of analysts received no bonus this year – something that was very rare before the financial crisis.

“Base salaries began to shoot up a few years ago when there was a lot of scrutiny on bonuses at the top, and that fed through to those lower down the chain,” said Dartmouth Partners’ Logan Naidu.

“But now bonuses are falling thanks to poor trading conditions.

“After several years, this could become a long-term shift – analysts may start to see these levels as normal, and will not expect a return to pre-crisis pay levels.”