Bonus Review 2016 - What a vintage.. for some!
With banks announcing bonuses every week since December, we have been gathering more data on bonus trends seen so far this year. Our analysis shows that managers are down this year to the benefit of graduates and junior bankers who are seeing a striking increase in their bonus numbers year on year.Bonus evolution by job title: 2015/2016
| 2015 | 2016 | 2015/2016 Evolution | |
|---|---|---|---|
| Analyst | £6,000 | £15,000 | 150% |
| Associate | £31,000 | £37,500 | 21% |
| VP | £65,500 | £50,000 | -24% |
| Director | £150,000 | £100,000 | -33% |
| MD | £300,000 | £275,000 | -8% |
Pressure on managers:
VP and Directors' bonuses have fallen from the previous bonus season announced in 2015, which had seen a tangible uptick from 2014. Previously, banks focussed on retaining MDs and deal-making staff with the highest pay packages. These institutions lost mid-ranking managers (VPs) who were burdened and frustrated by incoming regulation on pay and whose bonuses had been neglected over the last few year.Banks are planning for the future:
Bonuses are up substantially for Analysts and Associates, despite current market conditions which have seen banks such as Morgan Stanley cut large swathes of staff especially on markets-related activities. Junior banking staff remuneration is usually mapped to a specific matrix with little room for leverage, but this year, banks have gone out of their way to keep junior staff happy, not withstanding salary increases for the top paying banks.Doughnut or bonanza? It's not all about bonuses - salaries matter too
With only a slight decrease in bonuses, the average bonus payment for Managing Directors hides the fact that their bonuses have been highly polarised this year with a large proportion of zeros at one end (or 'doughnuts') and very large pay packages going to key deal making Managing Directors. Banks no longer shy away from zero bonuses, as losing anything other than key revenue generating staff is not a current concern. With base salaries having risen dramatically since 2008, disgruntled Managing Directors are more than likely to stay put, even if only for their base salaries.Bonus evolution by bank 2015 / 2016
Based on 109 bonus entries from Front Office VPs working in the UK
| Bank | 2016 Bonus | 2015/ 2016 Evolution |
|---|---|---|
| Citigroup | £83,000 | 4% |
| Deutsche Bank | £40,000 | 0% |
| RBS | £37,500 | -6% |
| Credit Suisse | £60,000 | -9% |
| Barclays Bank Plc | £48,000 | -13% |
| Morgan Stanley | £45,000 | -24% |
| BNP Paribas | £51,000 | -27% |
| Bank of America Merrill Lynch | £63,000 | -30% |
| JP Morgan | £57,500 | -43% |
VP Bonuses are down!
The latter half of 2015 has been a stressful period for bankers, with poor results, accompanied by redundancies and bonus cuts. It has clearly impacted this year's bonuses, as 7 out of 9 banks cut VP bonuses.Back to normal for US banks?
It's been a rough year for American banks with cuts across departments; firms such as JP Morgan & BAML, who used to give bonuses well above average (respectively £100,000 and £90,000 for VPs in 2015), have now realigned their bonus payments to match European banks. Are US banks not going to be the best paying banks any longer?A dark horse: high bonuses at Citigroup
After doubling its profits in 2015, Citigroup is the only bank to have raised its VPs' bonuses in 2016 . This trend is unlikely to last though, as Citi recently announced unexpectedly poor results in the first quarter of 2016 which will impact their bonus pool next season.It's NOT all about the money...
Inspiring Generation Z to take up a career in banking is a challenge and high salaries and bonuses at top paying banks may not be incentive enough, especially considering the serious downside and risk of being exposed to legal proceedings as regulation and legal enquiries come into play.Don't forget the added stress of dealing with compliance processes and the lack of glamour of an industry largely held in contempt by the public and the press. More than doubling bonuses as well as increasing banking salaries for juniors might not solve the issue long term as this generation of young talent is intent on having a purpose in their career, which is putting pressure on banks to take a much-needed hard look at their culture, transparency & capacity to adapt to a Fintech economy.
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