The end of year bonus round is coming, and investment bankers might be starting to think that those 16-hour days weren’t quite worth it.
London-based investment bankers expect a measly bonus of just £24,461 ($35,960) when their cheques drop this month, and now rank right at the bottom of the pile when it comes to how much they expect to get in bonuses, as new European Union caps on bonus payments take their toll on the extra payments bankers receive.
While bankers are ‘suffering’, people working in private equity are cashing in. In a survey of more than 1,000 finance workers in the City of London, executive search firm Astbury Marsden found that people working in private equity now have by far the highest expectations when it comes to bonuses. On average, PE workers think they should get a bonus of £104,125 ($153,000) this year, roughly 71% of their salaries.
Not only do investment bankers expect just a quarter of what the guys in private equity get, they’re also right at the bottom when it comes to overall bonuses.
- Private bankers and wealth managers expect an average 60% of their salaries, or £59,196 ($87,000).
- Investment managers want around £27,000 ($39,700), with both corporate brokers and stockbrokers expecting a similar payout.
- Commodities traders are expecting decent bonuses this year, having capitalised on the crash in commodity prices in 2015. On average, they expect a payout of £26,939 ($39,600).
Traditionally, investment banking was seen as one of the most lucrative careers in the City, with the trade-off for their huge compensation being punishing hours. However the introduction of new bonus rules by the EU, as well as the generally increased spotlight on bankers, means that the rewards in private equity firms and private banking are now a lot higher.
Adam Jackson, Astbury Marsden’s Managing Director, said in a statement: “EU rules capping bonuses will have had a large part to play in this, but many banks are also reining in payments as profits remain under pressure,” adding that PE firms are “not necessarily bound by the same strict rules on bonuses, and this is reflected in workers’ far higher expectations.”
He also warned that “Investment banks could risk an outflow of key personnel if they are tempted away by the comparative largesse of private equity firms.”
This is something echoed by many in the banking world, who worry that the new rules will lead top banking talent to go into investment management, or private equity, where hours are less, freedom is higher, and now, it seems, bonuses are a lot better.
Astbury’s research is not the first to show that the bonus pot for bankers is shrinking. In December, crowdsourced pay-data firm Emolument also reported that bankers are expecting lower bonuses than they have for a long time, while in November, it was reported that Credit Suisse might have to cut its bonus pool in half.
Bonus figures are generally reported by banks in their fourth quarter earnings reports, many of which will drop in the coming weeks.