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City workers expect 24% bonus for 2011

City workers expect 24% bonus for 2011

Managing Directors expect bonuses of 70% or &pound166,000

Average base pay has risen 12% throughout 2011 
City workers expect an average bonus of 24% of their basic pay for 2011, says Astbury Marsden, a leading financial services recruitment firm.

According to their research Astbury Marsden says City workers are expecting a typical bonus of &pound19,920 (based on an average salary of &pound83,000). Last year, City workers expected a typical bonus of &pound25,570 or 35% of their basic salary (based on an average salary of &pound73,050).

Managing Directors (MDs) have the highest bonus expectations, with the average MD expecting a bonus worth 70% of their base salary for 2011. That equates to a bonus of &pound166,000 based on an average salary of &pound237,000.

Astbury Marsden explains that senior staff within investment banks and other financial services firms will have a far higher percentage of their overall remuneration based on performance related pay or share of bonus pools than more junior staff.

The slightly more junior “Directors” within investment banks, expect, on average, a bonus worth 42% of their basic pay.

Mark Cameron, Chief Operating Officer at Astbury Marsden says expectations on bonuses are substantially weaker than this time last year with at least 12% of City employees expecting zero bonus this year.

Adds Mark: “Just over half of City employees that we recently polled said they were unsure whether they were getting a bonus or not. That is a real shift in sentiment on bonuses from previous years. In the pre-credit crunch days bonuses were talked about in many multiples of base pay – this year the expectations are for fractions of salary.”

According to the Centre of Business and Economic Research (CEBR), City bonus pay outs for 2010 dropped 8% from the previous year to &pound6.7 billion. The CEBR are expecting bonuses for 2011 to fall by 38% to &pound4.2 billion.

Mark Cameron says: “The recent redundancy programmes may have helped bonuses slightly as they have the side-effect of reducing the number of team members amongst whom the bonus pool needs to be shared.”

“However, the hit to trading and advisory revenues since the start of the summer have left few in doubt over the direction of bonuses. Line managers have also made a big effort to try and control their staff’s expectations.”

“That does seem to have worked as last year staff expected bonuses worth an average of 35% of base salaries. However, despite the ongoing redundancies in the City it is inevitable that there will still be many City workers disgruntled with their bonuses in the New Year.”

“If they are bringing in income but not being rewarded there is the risk they will look elsewhere. However given the redundancies that have taken place this will be far less of a problem this year than normal.”

This year’s bonuses will come on top of an average 12% increase in basic pay for City workers over the last year (source: Astbury Marsden).

Highest bonus expectations in investment bank staff are in M&A teams

Astbury Marsden says that despite the global slowdown in M&A transactions, investment bankers working in M&A departments are expecting an average bonus of 60% of their base salary for 2011. This is the highest level of bonus expectations by department within investment banks.

Investment bankers working in fixed income have the lowest bonus expectations, with staff anticipating an average bonus of 13% for 2011. Astbury Marsden explains that turbulence caused by the Eurozone crisis have severely impacted trading profits in fixed income.

* Research conducted among 1,380 City professionals, from Analyst level to Managing Director.

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