by Sharon Chammah - PER
18. October 2011 13:08
We started the year with fresh promise of increased deal flow and larger analyst classes within the investment banks. Following a summer of discontent we were eager to see the impact on bonuses for analyst and associates on a summer cycle. With rumours of yet further rounds of redundancies and growing pessimism in the markets, bonuses across the banking sector were sure to be heavily impacted.
Or were they? Once again this summer, when many of the investment banking analysts got their annual reviews and bonuses, we have seen base salaries at or around the same level as 2010. Bonuses however, have seen a little uplift on last year with a wider gap between different levels of ranking.
In some cases banks were awarding bonuses of up to 130% for top ranking second and third year analysts. This is clearly the banks’ attempt to retain talent for longer as the wave of analysts and associates moving towards private equity was more apparent with the promise of greater deal exposure and a more a hands on experience. These bonus levels were only awarded to 3-5 top ranking analysts out of classes of circa 35 in the UK; further tightening the competition for that elusive bonus and upping the stakes for being a top performer.
Do banks expect greater loyalty for the reward and is it impacting on analysts’ decision to move?
The answer is yes, the healthier bonuses mean that analysts especially from the class of 2010 are thinking twice about making the transition so soon compared to their peers a year ago. This is in contrast to the increased demand from private equity houses for more junior analysts as they are eager to attract talent earlier on. Classes of 2008 and 2009 which were reduced to begin with, are dwindling fast thus funds are now targeting analysts who have only just completed their first year. Also, funds want to attract analysts before they make the transition to associate when they gain a significant uplift in base salary.
Despite all the redundancy rumours, class of 2011 were at the same levels as the previous year which means that the candidate pool for 2012 and 2013 looks more promising. The fight for the top spot within the banks is ever more competitive and the calibre and drive of these analysts should follow suit. Some redundancies have already occurred and seem to have impacted more outside of M&A and on the associate and mid levels; all eyes and ears will be on bonus announcement for analysts and associates on the January cycle 2012.
Sharon Chammah - PER
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