Why is IB in London paying so much less than IB in New York or Frankfurt?

According to the Arkesden report BB IB in London pays around £60-65k base. US BB IB pays $100k = £80k base. So roughly £15-20k more. IB in Frankfurt pays €80-90k = £72k base. Given that Bonus % is roughly the same across regions and working hours are not substantially worse in one region over the other.

Why is pay so bad in London? Even after accounting for cost of living, compensation is way worse than in New York or Frankfurt.

 
Funniest

Frankfurt is so shit they have to pay people more to live there

 

Frankfurt is actually pretty decent, and you will get tons of experience being there. 

Sure, you won't find the nightlife like in London or NYC, but why do you care if you pretty much live in the office? Besides that, you make a good amount of money and the cost of living is quite cheap. Would choose Frankfurt any day for my analyst years, maybe London or NYC if I want to make a long-term career in banking. 

 

Continental Europe salaries were set to align with London, at a time when the pound was strong. The fall of the pound from 1.7 Eur back in the 2000s to the actual 1.17 has obviously made London fall behind the rest of the continent (especially in a CoL basis).
 

However, when the average graduate is pulling £30k a year, banks have a strong argument not to increase it. 

 
Most Helpful

I have worked and lived in multiple locations before and I am based in NYC and London atm. When I was in FfM and NYC, the BB I was at looked at the individual situation more, ie when a colleague rotated to another location they analyzed costs, efforts, and came up with a reasonable number. Eventually that number was lower in some locations, but not unfair.

It also depends on whether you are an existing employee, part of a rotation program or FLDP, an individual/external applicant/professional hire, and what the local employment market is like. The market is ever changing for almost any industry.

At the end of they day the jobs and salaries are advertised for the local market. It is extremely unlikely that one and the same applicant will apply at a BB for the exact same job in three different countries. How would that work? How many applicants have the legal right to live and work in the US, the UK and Germany? Among all the people I know, it would be just me. The question is a bit like asking why a BMW 3 series has a different price in NYC compared to Frankfurt am Main  - how would this matter to a local buyer? The globalized world we live in has different salaries, prices, CoL and cultures in each country.

If a person truly has the ability to live and work in so many locations, they normally have a different view on this topic anyway. There is a reason why they can move around and comp alone is not the reason. You don't just pack up and move to another country because they pay a little bit more.

In my personal experience from interviewing in London, entry level or less senior jobs have always been on the lower end. There are typically more applicants per role, competition is high. The UK churns out many degree qualified candidates each year and it is not always guaranteed that a degree will lead to a career. Employers can get away with a lower salary despite CoL. There is also a lot more immigration to the UK/London than Frankfurt would ever have, it is a common theme for citizens of the Commonwealth to study in London and then settle down there. I have never heard anyone from New Zealand or South Africa say that Frankfurt is their life goal....

And, to give another view on comp - London salaries are significantly higher than in London once a certain level of seniority is achieved. When I applied for a director level banking job a while ago the London salary was 85% higher than a comparable job in Germany. So it may pay off being in different locations once a candidate is more senior.

 

Brit here. So overall the salaries in the UK are lower than our American counterparts across the board, this isn't dependent on sector or on location, they just don't compare in any form. This could be due to our lower cost of living, varied property pricing, historic class system or the fact our tax system is inept to accommodate good salaries, but either way it's a widespread issue. Breaking away from our Financial Sector (but fyi in IB I only took home £60k base so relate), let's look at the salary of a school administrator based on national averages in the United States and the United Kingdom:

In the US that Admin'er is looking at $35,000 or £27, 952.
In the UK that same Admin'er would earn roughly £19,000 or $23,792. 

It just sucks here, simple 'as. 

Life is a road... and I love creating potholes
 

Can confirm - interned in Transaction Advisory for a Big 4 in Rome Summer 2019 - €900/month wage. My Sr. Analyst was on around €38k all in inc. bonus...

 

Big pay divide since post-GFC. Heard comp in London was very similar to NYC back before GFC. I think HK was below NYC comp pre-GFC and still is.

Edit: Appears I was likely wrong about HK

 
HardestOfHardos

From what I gather there is literally just more money to be made for banks in the US. They can afford to pay employees more because they make more.

Didn't see this comment but that was my assumption. It's the largest global economy with masses of $B deals done each year. There's simply more in fees to be generated in NYC than any other place on earth. 

 

Cum sint rerum labore esse eos. Harum fuga voluptas et assumenda a nisi.

Career Advancement Opportunities

April 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

April 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

April 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

April 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (87) $260
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”