How much will you earn in your first year out of university in an investment banking job? If you work in M&A, equity capital markets or debt capital markets for a major investment bank in London, the answer appears to be around £80k ($103k/€88k). Despite the COVID-19 pandemic this is higher than last year after several banks hiked analyst bonuses, awarded in the summer.
Research by recruitment firm Dartmouth Partners suggests bonuses for first year analysts (ie. in their first year of banking since leaving university), rose 15% this summer to an average of £35.8k. When £50k average salaries are added in, this gives average first year total compensation of £85.8k.
The chart below shows Dartmouth's record of how total compensation for analysts, associates and vice presidents in investment banking has evolved since 2012. Second year analysts had their total compensation held steady this year. However, first year analysts weren't alone in receiving a pay bump: third year analysts had pay increased too.
In the case of first year analysts, this is the first time total pay increased significantly for three years. For third year analysts, this is the first time pay increased significantly in two. Second year analysts were paid flat. "The general sentiment was described as, "pleasantly surprised given market conditions," says Dartmouth chief executive Logan Naidu.
Mean total compensation (salaries plus bonuses) in London investment banking divisions of major banks, 2012-2020
Source: Dartmouth Partners
As we reported a few weeks ago, not all banks pay analyst bonuses in summer. Summer payers include JPMorgan, Goldman Sachs, Bank of America, Citi and Deutsche Bank, with remaining banks paying in winter at the standard time. Some banks paid more handsomely than others this summer: at Goldman Sachs, first year analyst bonuses were squeezed this year, and down 33% on 2019. JPMorgan appears to pay considerably more as a result.
First year salaries and bonuses, junior investment bankers, London
Photo by Anthony DELANOIX on Unsplash
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