A first year analyst at a BB or EB in NYC or any tier 1 American city makes around $110k while an analyst in London at the same bank makes GBP 65k which is roughly $80k at current exchange, since bonuses are a % of base salaries it means that probably their bonuses will also be much lower.
What explains this massive gap in compensation between American and British bankers?
The gap in compensation is explained for different reasons:
- The cost of living in the UK is much lower than in any Tier 1 city in the States
- The M&A and IB markets in the UK are very small compared to the same markets in America. Investment Banks don't generate much money in fees in the UK despite having a huge number of bankers in London
- The small compensation in London is compensated with a much better WLB, IB in London is still not a 9 to 5 job, but IB professionals in the UK don't go through the grind as people in NYC do. Most bankers in London work around 60 - 65 hours and maybe 75 during live deals while bankers in America work around 90-100 hours, not to mention that in the UK they get 5 or 6 weeks of PTO
You clearly have never been to London.
You definitely haven’t to the US either.
While rent in London is crazy expensive (mainly from all the non residents investing in RE), actual CoL is pretty reasonable for the size of the city. You can get a beer downtown for ~£5, a substantial sit-down lunch for one for under £15 (even know buffets for less than £10, £8 even), a decent dress shirt for £35 if you buy 4. If you don’t mind living in Zone 4 and beyond or sharing a flat, you can def get to enjoy life and save.
Now, if you want to live like a rockstar then an afternoon in Mayfair can easily leave you penniless.
I unfortunately did not feel the same when I lived in NYC or spoke to my buddies in SanFran. Only Chicago seems to be better than London CoL wise.
Where are these bankers only working 60 hours in London?
London is just as expensive as NY if not more..
More? Come off it mate
You are a retard
London is as expensive as new York
Ooh way off on the UK hours there man. Maybe a few hour discount per week but nobody is working 60 lol. No one
1) It would be good if you could tell my staffer that London bankers don’t work more than 60 hrs a week
2) You have never rented a flat in London. A regular 2-bedroom in a decent area is easily £2.5-3k (with a lot of upward potential...) which is the same as NYC.
Lol a 2 bedroom in New York is 6k minimum nice try
A studio in a decent area in NYC is $3K, ofc depending on the luxury/amenities
US work culture is ass. Doesn't explain the difference, but I would 100% rather do my analyst stint in London rather than the US.
isn't WLB only marginally better in London than NYC? What's so ass about US culture?
I have meet our London team once and they were shocked how much and how fast we worked. - Might have just been that one person, but the other thing I notice is our European team actually respects PTO and seems to get more too.
What explains your inability to do basic research?
London has less deal flow and makes less money than NYC franchises. Makes sense they make less since they contribute to a smaller part of the pie. If you want to get paid strictly on performance/your ability to succeed in EMEA markets, recruit for a hedge fund. You can make more than your US counterparts if you're good.
It’s not a question at the analyst level…
It’s not about the cost of living of Us vs UK, it’s about what the banks can put in the compensation pool.
That being said, I have no idea how total comp actually compares - worth a check. As associate & VP I never felt like My US counterpart was making significant more; but I may be wrong
This is the right answer.
Also to add onto the first point, many clients in EMEA hate paying M&A fees whereas North American clients see it as a cost of doing business. So winning mandates usually takes more effort and when you win one, you get paid less and the client expects more work, which ties up resources - therefore revenue per head is lower.
Lol I got staffed on a cross border deal and had to deal with all the onboarding documentation as the intern. Our bank’s London office fee is like half of what it is in our New York office, and the client got all upset when they found out they’d have to pay a combination of both.
This. And you can draw similar parallels to anywhere outside of US - EMEA, Asia, LATAM. Clients are generally reluctant to pay for M&A fees outside of the US, and most of the M&A creds (and some fees) is directly tied to ECM/DCM activity that the banks provide.
I've worked on a transaction where 2 European Banks were on an ECM matter that was tied to a M&A deal that we were running for the same European client. Even though the European Banks got "credit" for the M&A deal, we were the main advisers (and drove 90% of the M&A process): our fees for ~5 months of work was about 3x what they made for about a year or so of their engagement. The client saw us as a necessity/'cost" of doing the M&A deal for a global target, even though we have no balance sheet capabilities (at an EB).
Another different tangent I'd like to add here, i.e. LAYOFFS. Does banks in London layoff less number of bankers than in NYC at times of downturn since they're underpaid
I don’t believe so for the Uk. I’ve seen casually 20% of the floor laid off in a year, with a redundancy plan at the end that included fresh A1s who had been there 2-3 months. And that wasn’t even an american bank
Payoffs are limited (even in Court)
France and Germany are another story though
I got your point. Had read a statistical report on M&A advisory deals in different global regions. So over there, I saw that literally, all the banks were pulling off 250+ deals a year, consistently from 2017-2021 in the USA, whereas in the UK, Rothschild advised on 175 deals in 2021, the highest in the last five years. So this explains why London bankers are a bit underpaid than their American counterparts.
However, a handful of banks have advised on 50+ M&A deals consistently every year. Such as Rothschild, GS and JPM. Do you mind that Rothschild pulls off 100 deals in the UK every year, whereas the latter two advise something 70-80 (even a bit less for JPM)
So do you think that fresh graduates are pretty safe from getting laid off from these three banks in their two years stint at the bank?
I think the biggest factor is actually currency. The UK does not get extra pay in GBP to account for currency depreciation vs USD. Back in ‘09 £1 was worth $1.57, now it’s like $1.25 lol. That’s a 20% discount. US bulge brackets are now £70K base for first years ($87.5K) vs $110k in US. In other words also a 20% discount pretty much perfectly in line with the currency.
Because London banks wouldn't give a shit what American banks pay because that's not their competition for talent, other industries in London are. Other industries in London pay much less, with McKinsey paying ~50k for its consultants, compared to 70k in banking. If you take Big 4 or Tech into consideration, it's almost double the average salaries there.
Oi M8! We aren’t gettin payed the same as the US bankhuz, yeah? Wot the fock bruv??? Oi! I bloody need some tea now, yeah?
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