COMP NEWS – The last couple of years have been wild for banker bonuses, with compensation sharply dropping and rebounding based on variances in quarterly profits at major banks. Financial analysts fear that 2024 will not be kind to junior bankers, with many believing bonuses will be slim through the next two quarters.
It’s bonus season for analysts working in the investment banking division of various leading banks. Despite the prodigious increase in investment banking revenues at various top firms, junior bankers don’t seem optimistic. Instead, on forum website Wall Street Oasis, there are suggestions that this year’s packages are “scarily” low.
How low could they go? The tables below show figures for 2023 first year analyst compensation in London and the US, provided by recruitment firms Dartmouth Partners and Prospect Rock Partners. They suggest that the average bonus for a first year analyst in the US last year was $45k. In the UK, it was £29k ($38k). In London, average bonuses across the analyst ranks were down by around 13% on 2022. In the US, Prospect Rock says they were down 5% for first years and 23% for analyst twos.
One factor driving market speculation is the 2024 U.S. presidential election. Some analysts believe that the market – and speculative profits – will settle more after November.
The fear is that in 2024 analyst bonuses could again decline or be flat at best. Even though fees earned by M&A and equity and debt capital markets businesses in the second quarter were up by double-digit percentages year-on-year at some banks and even though banks like Morgan Stanley are enthusiastically calling the start of a new multi-year investment banking cycle, the real upswing isn’t quite upon us and may still be delayed by the US election. In debt capital markets in particular, the expectation is that things will quieten in the second half after refinancing deals were bought forward. And even though, fees are up, they’re up from a very low base.
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