Junior bankers pleasantly surprised by summer bonus round
While most people in banking will receive bonuses for 2020 in early 2021 and therefore risk having their hard work wiped out by pandemic-induced writedowns in the second half of the year, some people are paid early. Several banks pay the M&A and investment banking division analysts at the bottom of their hiearchies bonuses in August. And this year's August analyst bonuses aren't bad at all.
“Everyone seems pleasantly surprised with what they got. It’s been a relatively good bonus round, particularly when you consider what’s been going on in the market,” says Logan Naidu, founder and CEO of London search firm Dartmouth Partners.
Summer bonus payers include JPMorgan, Goldman Sachs, Bank of America, Citi and Deutsche Bank. At U.S. banks in particular people seem happy.
"The top bucket here received around £45k (~€50k/$60k)," says one first year analyst at JPMorgan. "Bottom buckets received c. £30k and everyone else was in between." These figures are not verified by the bank, which didn't respond to a request to comment. Last year, Dartmouth Partners put the average 1st year analyst bonus at JPMorgan at £39k.
Numbers were only released recently: Goldman, for example, announced late last week. More clarity is expected over time. For the moment though, sources say it looks like more senior analysts with two and three years' experience have had tiny bonus increases while first year analysts are predominantly receiving bonuses that are flat on last year.
This is particularly reassuring considering that M&A revenues were down 11% year-on-year at Goldman Sachs and by 6% year-on-year at JPMorgan in the first half of 2020 (although they were up 38% at Citi over the same period).
Banks may be paying-up to preserve experienced juniors in the expectation of a recovery to come. In a report earlier this month, Goldman Sachs predicted that M&A will pick up in the second half, "as ﬁrms adapt to the new environment and rely on inorganic growth to pivot their business models to better serve customers and compete effectively." Cash-rich sectors like technology, energy and healthcare should be more active, said Goldman - implying that juniors in these areas should receive better bonuses than most.
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