The sweet spot for investment banking bonuses in 2014

Where in the world are investment banks pandering to their employees, offering them incentives of larger salaries and the prospect of a larger bonus? The sweet spot to work currently in investment banking globally is in the UK at associate level.

More bankers with 3-5 years’ experience in the UK are expecting a larger bonus than anywhere else in the world, according to the latest eFinancialCareers bonus expectations survey, which took in responses from nearly 3,000 financial services professionals globally.

75% expect a bigger bonus this year, the largest proportion of any group, followed by 69% of bankers with 1-2 years’ experience in the City. Optimism is similarly present among the junior ranks on Wall Street, with 65% of both those with 1-2 years and 3-5 years’ experience expecting a bigger bonus this year. In Singapore, those in senior positions think they are more likely to get a big bonus this year, with the largest proportion of respondents – 51% - having more than 11 years in the industry.

Junior bankers are, of course, hot stuff with investment banks attempting to deal with a combination of workload pressure on analyst and associates and their increasing propensity to leave banking for the buy-side. Goldman Sachs, JPMorgan, Citi, Bank of America and Morgan Stanley all hiked up base pay for their junior staff, by up to 20%, and clearly analysts and associates are expecting to be rewarded handsomely in this year’s bonus round.

Our figures suggest that they’re expecting more of the same this year. 68-73% of junior bankers in the UK and 67-75% in the US said they had a pay rise this year, the largest proportion of which received 11-30%. What’s more, 60% said they’re anticipating a pay rise again over the next six months, but the majority have more modest expectations of up to 10%.

The largest proportion of UK-based bankers with 1-5 years’ experience (34-44%) said they were expecting an 11-30% bonus uptick this year, while 35-38% of those on Wall Street said the same.

Interestingly, however, while expectations of a large uplift were tapered in the senior ranks in the UK – a lot of banks, notably Barclays, are cutting at director and managing director level after all – optimism continues into the upper ranks on Wall Street. 41% of those with 11-14 years’ industry experience said they were expecting 11-30% more, while 35% of industry veterans with more than 15 years’ experience anticipated the same uplift.