Investment Banking Compensation 2020


The effects on compensation packages throughout 2020.


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It’s hard to believe it’s mid-October already, where has the year gone? You may have heard this phrase already; we live in unprecedented times. For those who follow the undulating fortunes of investment banks, we’ve been here before, well, sort of.

At the start of the lockdown in March 2020, many of the global investment banks indicated that they would not be cutting jobs.  A few months on and there have been a few cracks in this resolve as banks are facing increasing pressure to cut costs as profits have declined over the course of the year.  After almost seven months of responding to the pandemic, UK GDP has declined by 20.4%in Q2.However, a renewed sense of optimism was created by the easing of lockdown restrictions in July 2020 and the “Eat Out to Help Out Scheme” brought a degree of normality back to our high streets and daily lives. 

All the same, it is expected that the economy will contract by c.10% this year vs 20192, and while we’re now looking down the barrel of a protracted recovery, we are seeing the market stabilise and a slow and steady climb towards pre-lockdown productivity. As we navigate our way through the impact of COVID, one of the questions in our minds is – how has this age of COVID affected millennials and Gen Z? Have the limitations of life in lockdown affected how the younger generation think about their future? It has certainly made exploring career opportunities more accessible given their more flexible schedules. It may also have inspired millennials and Gen Z to reconsider their priorities and options. What gives us the best wellbeing and flexibility? Can I continue to work away from the office? 

Coupled with the continuing appetite to hire from private equity, start-ups, VCs and corporates, investment banks have to face up to the increasing war on junior talent.  This may account for the analyst bonus numbers over the summer which have remained steady to up on previous years despite the impact of the pandemic on M&A and investment banking revenues and activities. The message seems to be – “we appreciate your resilience and continued hard work, commitment and productivity over the last 6 months in tough circumstances and we want you to know this and we want to demonstrate we are investing in you for the future”.

Lessons have probably been learned from the last financial crisis – keeping your strong junior population well is a small price to pay to keep the business healthy in the mid and long term.

Whilst bonus numbers are but one of a number of indicators on the job satisfaction scale – it is a key indicator in the ultra-competitive world of investment banking. The question on the rest of the banker population who are due bonuses at the end of the year and early next year is – are they going to see a similar pattern or is that perhaps unrealistic and they will be expected to take more of the pain? Only time will tell – and there is still another 4 months before the year is out.

Put your money where your mouth is

Analyst bonus figures were mostly well received and do not appear to have been affected by COVID. While there was not a year-on-year increase across all classes, expectations were well managed at most institutions. The trend of shortening the Analyst cycle has continued with Barclays being the latest to shift to a two-year model.

Analyst 1 bonuses were significantly up this year on 2019, with an increase of 15% across the class. Across Barclays, BAML and Citi many Analysts were paid between 100-100% of base salary. The general sentiment was described as “pleasantly surprised given market conditions”. At Barclays, many top performing Analysts were personally commended by MDs’ which in turn boosted morale. However, not all Analyst 1 bonuses were up this year; Goldman Sachs were the lowest paid across street and down by 33% on last year.

Those at the Analyst 2 level felt the biggest squeeze this year with the class seeing a decrease of 6% relative to 2019. Citi were the highest paying at this grade with a mean bonus figure of £52,000 compared to both Goldman Sachs and Deutsche Bank which paid an average bonus of £38,000.  

Analyst 3’s saw the largest year on year increase at approximately 20% versus 2019. While there is a shift away from having a third year Analyst class, those in it received average bonuses more than 100% of salary. Citi again came out top of street paying an average bonus of c£73,000 while JP Morgan paid an average of c£65,0003

Bonus figures for Analysts have reflected strong results across Q1 and one of the takeaways from the figures is that banks are making a real effort to pay and retain their top junior performers and invest in the future leaders of their businesses.

Activity levels in M&A are gradually picking up after a sharp decline since April 2020 when more than $100billion of M&A deals were terminated amid COVID4. Private equity looks to capitalise on post-COVID economic recovery as they have continued hunting for new investment opportunities.  Firms with equity capital markets and broking capabilities are expected to continue doing brisk business given the rounds of emergency equity fund raisings which are predicted to continue.

A “new normal” culture

Trends have shown that lockdown has proven difficult for the current Analysts, and while many have enjoyed the shorter commute and extra sleep, there has been an increased intensity of work vs when in the office. Dartmouth’s 2020 Generation Z report found that 40.1% valued flexible working, while only 8.6% listed work/life balance as important when choosing their next role. Given the sheer volume of accessible tools, platforms and portable devices, being tied to an office for many of the younger generation might seem overly traditional. 87% of millennials say “having flexible work hours/ability to work from anywhere” is important to them when thinking of their future careers5.

Ultimately, firms with the ability to attract top talent will embrace flexible working and embed a culture of trust and accountability that enables their employees to deliver, regardless of location. Dartmouth’s recent Diversity and Inclusion report highlighted that while pay is a critical part of implementing a successful diverse and inclusive work force, providing a platform where employees are heard, supported, and given credit with clear feedback is key for long term success. A central factor in creating cultures of inclusion is the role of leaders in role modelling inclusive behaviour, however, recruitment can also play it’s part.

A 2017 paper by McKinsey and Co, identified team composition as the starting point for creating high performing teams, of which diversity is a central element. Working with a recruitment partner who not only understands your requirements, but is able to adequately recommend a talent fit that looks outside of pure skills based assessment will help to improve diversity within your teams – this together with inclusive decision-making, will significantly increase business performance.

As we climb towards recovery, we are working to ensure our clients get the most out of their hiring strategies. For many of the firms we are working with this means a focus on revenue generating roles. With the market in flux, there is an opportunity to put your firm in front of exceptional MD and Partner-level talent who are now considering a move. The experience within our team means we are uniquely placed to help you find top-tier talent to help you weather this storm, and the next. If you would like to discuss how to create a hiring and retention strategy that will positively impact your bottom line – get in touch, we’d love to help.


  1. “GDP Monthly Estimate, UK: June 2020”
  2. ‘UK economy to slump over 10%, debts surge: Moody’s’
  3. Dartmouth 2020 March Analyst – VP Bonus Survey
  4. ‘PITCHBOOK Q2 2020 EUROPEAN M&A REPORT’ – pages 4-7


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