We’ve just completed and released our IB analyst to VP compensation survey. So, how are bonus numbers looking? 2016 was an unpredictable year, with first-half optimism halting immediately after June 23rd. The world didn’t come to an end, though, and confidence grew towards the end of Q3 and through Q4. Banks have entered 2017 with renewed vigour and optimism, albeit with one eye on possible clouds on the horizon. Here are our thoughts.
“Now we go straight away to try to win the title. We are in the Champions League, dilly ding, dilly dong – come on. We are in the Champions League, it is fantastic, terrific. Well done to everybody.” – Claudio Ranieri
Dilly ding, dilly dong. Come on. Two months into the year and I have to say, I’m pretty optimistic. Brexit hasn’t (yet) caused a financial meltdown, Trump hasn’t (yet) instigated global diplomatic crises, and reigning Premier League champions aren’t (yet) down; of course, people are working hard to ensure none of these things happen. At the same time, we’ve reached record highs on the DOW 500 and the FTSE 100, and the UK economy appears surprisingly robust.
So, how are bonus numbers looking? 2016 was an unpredictable year, with first-half optimism halting immediately after June 23rd. The world didn’t come to an end, though, and confidence grew towards the end of Q3 and through Q4.
Banks have entered 2017 with renewed vigour and optimism, albeit with one eye on possible clouds on the horizon. With revenue down, bonus pools across the banks have almost universally followed, with the bonus pool generally down by 5-10%. However, Analysts and Associates have been largely protected.
The numbers suggest little variation in terms of average figures on last year. In fact, our overall Associate averages have crept up a fraction in relation to 2016. UBS appears to have topped the market, followed closely by Credit Suisse, although another round of pay freezes at the former seems to have gone down badly. If the pool is down and Analysts and Associates have been protected, who has felt the pain?
Well, it seems the higher up the chain you go, the greater the chance of disappointment. VPs have largely been frustrated – particularly in the case of Deutsche Bank – and Directors and MDs still more so. The general trend of widening overall bonus ranges at each level continues, with top performers being prioritised before worrying about the majority of bankers. The spread between top and average figures has continued to grow.
The Dartmouth Partners team have started the year with record buoyancy. Since the start of 2017, we’ve taken on more new mandates and won more clients than ever in previous years. Our hiring partners are broadly optimistic and find themselves in need of additional horsepower, largely at the Analyst and Associate levels.
Having raised record amounts of capital, Private Equity continues to be in search of good juniors and this has created “flow” from the banks to the buy-side. There will continue to be both replacement hiring and also some growth recruitment. Talented juniors are as scarce as ever, and this year we’ve already seen buybacks and counter-offers, with both financial and emotional levers being pulled.
As there are only so many trained juniors out there, the most forward-thinking businesses are beefing up their Graduate and Intern offerings, even in industries that don’t traditionally hire graduates. If you’re one of these firms, please get in touch with us.
So, we’re positive. I’m positive. But as we’ve seen most recently with poor old Claudio, it can all change ever so quickly. Best to focus on the challenges ahead. It’s hard to keep going. I mean, anyone can win something once, but to do what the GOAT, Roger Federer has just done, and collect his 18th Slam (and for that matter, Serena Williams with her 23rd), that really is something. And yet they keep going. We’d better keep going. Dilly ding, dilly dong. Come on.
For a full copy of the bank by bank survey, please email us.