2020 Investment Banking Compensation

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A complete salary guide to investment banking.

 
 

For a copy of the report, please get in touch via info@dartmouthpartners.com.

 
At this time of year, there are usually two key topics of conversation in the Square Mile, “when will spring arrive?” and “what did the bonus numbers look like?”. As I write this, external events have cast a long shadow over more 
trivial matters.
 
Over the last few weeks, pubs, bars, restaurants, and shops have been ordered to close. Most of the UK workforce is now acclimatising to working from home and are testing the nation’s broadband capacity. A protracted outbreak of COVID-19 could result in a more severe impact than that of the 2008 to 2009 downturn. As it stands, KPMG’s latest quarterly UK Economic Outlook forecasts a 2.6% decline for 2020; flat growth is predicted in the second half of the year. The FTSE 100 is down 30% from the start of the year. Are we in for a sharp bounce once we return to work or a slow protracted recovery? I’ll let you debate that in the virtual pub.
 
On a bonus related note, given the mixed performance across the larger investment banks in 2019, the bonus pool is unsurprisingly down by 5-10% across the street. The US institutions tend to announce and pay first, and whilst the pool was smaller, my guess is that if they were announcing and paying in March the size of the bonus pool would be smaller still and the bonus spread would be wider. Anecdotal figures have suggested that banks announcing and paying in late March have seen bigger bonus reductions across the board.
 
At an Analyst level, we’re seeing a total compensation decrease of 8.9% and 3.8% decrease at Associate level. Directors and MD’s that have also felt pain to the tune of 6.9%. The spread of bonuses by rank has been marked at the Associate level, with gap between top and bottom performers increasing on average from £65k to £99k, with Associate 1’s bearing the brunt. At an Analyst level, the spread has increased by £11k at Analyst 1, and interestingly, decreased by £15k at Analyst 2; Analyst 3’s has remained largely the same. While bonuses seem to have been paid much more meritocratically, people have largely viewed their pay as “fair”, so it seems that expectations have been well managed.
 
However, it’s not all doom and gloom as some markets are holding up relatively well. As interest rates plummet across the world, the search for yield and growth will continue. Private equity firms still sit on a huge amount of dry powder, and whilst financing deals in the short term might prove tricky, assets are suddenly looking like better value. It’s too early for many deals to surface, but assuming their existing portfolio companies are in decent shape, I can foresee a wave of PE deals in the next 12 months. This in turn will keep the bankers, lawyers and consultants in relative clover.
 
However, that isn’t to say that this won’t still be a trying time, we all know that it will be. The note I wanted to end on is that we are here for you. At Dartmouth, we’ve always viewed our role as being able to understand a wider narrative and to help others see the bigger picture. We’re here to help assist you through the next few months as you navigate talent retention and ensure a healthy pipeline. And when the economy recovers, help you to build a team that is bigger and better than ever before – please do reach out, we’d love to offer our support in any way we can.

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