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Investment bankers’ relatively modest 2016 bonus expectations dwarfed by Private Equity

Investment bankers are expecting relatively modest bonuses of under £25,000 on average this year - while Private Equity staff think theirs will exceed £100,000, reveals research by Astbury Marsden.

According to Astbury Marsden, investment bankers anticipate that their bonuses will be worth an average of £24,461 in this year’s compensation round – equivalent to 25% of salary.

Those working in Private Equity have the highest expectations of any sector of the City – predicting average bonuses of £104,125 – or 71% of salary.

Private bankers and wealth managers are the next most optimistic about their prospects, foreseeing payments of £59,196 on average – or 60% of salary.

Astbury Marsden found that on average across all City jobs, workers expect bonuses worth £23,196 (or 25%) of their salary (see graph below). It surveyed over 1,000 City workers.

Adam Jackson, managing director of Astbury Marsden, said, “This year, investment bankers aren’t envisaging sky-high bonuses.”

“Their expectations are in fact very modest compared to some other areas of financial services - notably those of Private Equity staff – which are more than four times higher.”

“The problem is that even those lower expectations are above what banks want to pay them.”

“Investment banks could risk an outflow of key personnel if they are tempted away by the comparative largesse of Private Equity firms.”

“EU rules capping bonuses will have had a large part to play in this, but many banks are also reining in payments as profits remain under pressure. Lower-than expected earnings, on-going restructuring costs, increased capital requirements and, for some, hefty regulatory fines, are all having an impact.”

“Private Equity firms are not necessarily bound by the same strict rules on bonuses, and this is reflected in workers’ far higher expectations.”

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