Bonus bad for all banks this year
It seems like nearly all banks this year have associates getting 80k bonuses? What happened this year for that to happen?
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Banking simply isn't what it used to be
My theory is ultimately all companies "must" grow and become more efficient over time. In essence they have to do more with less capital intensity.
How does that happen for an investment bank? Well, what's an (pure) investment bank's biggest chunk of capital? Human capital. You can make human capital more efficient in 3 ways: pay workers less, make workers work more for the same money, and increase productivity. The latter is really hard and takes ages and isn't reliable. Paying less (in absolute terms) really dulls morale. So over time you have to grow pay less than your revenue. And that is what we've seen over the past 20 years. Sometimes it's more evident than other times, but gradually this happens.
So are you saying it will never go back to 100% + bonuses ?
This forum has a ton of broccoli haired people with zero context of how things worked a few years ago.
The base bump in ~2021 was always a shift in compensation at BBs that did not affect total comp.
EBs have always greatly outpaid BBs at the junior levels - that’s not new.
Plot twist: DB / UBS / MS have been giving shit bonuses to juniors for almost a decade straight (maybe over a decade for DB)
I’m just saying associate 2-3s were making 400k even at BB prior to 2021 and now they make 270-300
There’s even datapoints of VP’s from multiple banks getting 100k-150 bonuses which puts them at 375-400 ish
It wasnt bad at all banks…
80%, infer bruh
Real reason is IB is becoming more and more like big 4. Big 4 pay, big 4 quality kids, big 4 prestige.
IB used to be an exclusive club where you had to know someone, or go to a top target school. The interviews were more about fit back then as people didn't expect anyone to know what IB did (they would train you on the job). Kids in the 80s and 90s weren't grinding away practicing technicals from the vault guide.
Over the years, IB became more visible to the masses. Hence the masses of kids practicing technicals, sending 100 networking emails weekly like a well oiled machine hoping to get one or two bites.
More internationals from third world countries who would do ANYTHING to work in IB. More nerdy psychos. More people who just even making 100k plus is a huge achievement for them and their family.
Banks can get away with paying less because WAY MORE people are desperate to do this job and KNOW A LOT about this job (and are prepped to do it).
If we were smart we would professionalize the industry like law/medicine to gatekeep people out, but its not gonna happen.
Also think it’s an issue that 80% of classes just end up leaving anyway for an exit. So it encourages MDs to pick more ouput machines they can churn and burn than quality long-term polished fits.
I think they’ve figured out that they don’t have to pay much and won’t have retention issues. Don’t think we will ever see ‘21 pay again. Especially inflation adjusted.
its not even 21 pay...its like pay 10 year ago. It was totally totally normal for VPs and Associates who were mid bucket to get 100% bonuses pre 2021. Expected actually.
If you had a good year like 21 it was 150% maybe even more.
Now the only people getting paid 100% are the top bucket folks (if that). in the past more of the population got incentivized
Calling what some associate does at BofA or UBS investment banking is the real joke. That’s commercial banking
No one will or should pay you for pushing paper for pitchbooks
IB only exists at the independent firms and GS most of which pay pretty well still
Dumbest thing I’ve seen on this website
I mean look at the Lazard thread, pay is still pretty low. It’s a trend across nearly all banks. Didn’t see GS comp but my guess is still sub 100%, correct me if wrong.
Moreover, junior bankers can only execute what is on their plate via seniors. These places have a lot of MDs walking around on guarantees who aren’t pulling their weight.
I think we will continue to see a huge bifurcation between the boutiques that do pure advisory (actual investment banks) and the BBs. The BBs are essentially commercial banks masquerading as investment banks - in most cases investment banking makes up ~10% of a BB’s revenue. This comes with a ton of overhead, bloated headcount, etc. the boutiques are much more lean and “eat what you kill”, so they pay more.
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