Investment Banking Compensation Report 2021

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Did the bonuses this Summer do enough to keep junior bankers where they are?

Get a copy of our Investment Banking Compensation report here to find out about the bonuses paid out across the Analyst class this Summer.

The resilience the market has shown over the last year and the unprecedented surge in deal-making has led to many junior investment bankers receiving double/triple digit increases in bonuses this summer, compared to the corresponding period in 2020.

The latter half of 2020 saw the busiest period of large-cap deal flow since 2015. Following on from this, the first six months of 2021 have been even stronger and global M&A has totalled $2.4 trillion (total value of pending and completed deals announced from Jan-May) which is an all-time record according to Refinitiv data. This is up by 158% from the same period last year, and already equal to 80% of 2020’s total deal value.

This incredibly strong deal flow has been fuelled by more looking to deploy their massive war-chests and as the larger economies resume normal business and vaccination efforts intensified globally. Although there is some speculation that the Fed will be raising interest rates by 2022, there is the expectation that current level of strong deal flow will be sustained into the new year.

Movement amongst the junior class

Analysts’ total compensation has been significantly higher this year due to two main contributing factors. Firstly, the widely discussed presentation – in which junior Analysts from a certain US bank highlighted their dissatisfaction with both their professional and personal lives, sending shockwaves through the industry. This acted as a catalyst for a broader discussion surrounding mental health, work / life balance, and working culture – all issues exacerbated by a series of lockdowns. Secondly, the surge in deal flow resulted in longer working days for all levels. The combination of these factors resulted in each Analyst class at every major bank receiving benefits in kind, substantial increases in base salaries, as well as substantially higher bonuses.

But are these efforts enough to retain junior bankers to work throughout this busy influx the sector is experiencing or are the new offers from further fields turning more and more heads?

The ongoing efforts to retain the Analyst class remains a visceral focus amongst banks. And while Analysts appear to be generally content with both salary increases and generous bonuses at present, many remain unconvinced this will be enough to keep them in the industry longer term. Other industries such as private equity remain as popular career steps, but we’re now also seeing an increase in moves to less stressful areas with shorter working days. It’s hard to know whether it’s down to the hours, the isolation of working remotely through COVID, or is there a more fundamental issue?

If not investment banking, then what?

A number of those we spoke with described investment banking as lacking creativity, innovation, and providing purpose to their lives. And during an era of mass growth and innovation, this has left those with lofty ambitions of “making it big” with little confidence that this could happen within their current field.

The growing sentiment amongst the younger generation that banking has lost its appeal, particularly given that other industries such as consulting and tech have increased their salaries and offered the exciting prospect of moving to a start-up / scale-up opportunity, resulting in many no longer seeing banking as being “worth the grind”. The cynicism we’ve observed in Analysts while completing this year’s bonus survey will be galling to many seniors, who may feel they’re owed more goodwill and an understanding of what graduates are signing up for in return for a £100,000 salary in their first year of the job.

If you’d like to discuss the findings of this report with one of our specialists, get in touch via MandA_IBLondon@dartmouthpartners.com

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