by Girl Banker
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This is the one question that everyone wants answered. Investment bankers' compensation is made up for two parts - base pay and a bonus.
Base pay is very transparent so let's start with that:
What about VPs and MDs?
Base pay for VPs and MDs doesn't rise hugely above the levels you see in the above table. Their compensation varies a lot more because of their bonus.
Which banks pay the most?
American banks tend to pay more than UK banks. UK banks tend to pay more than European banks. This is partly because big American banks make more but it's also cultural. The American dream is a capitalist one: make as much money as you can. Making money is synonymous with hard work in America.
As you move towards the UK strong socialist ideals start coming into play. This is even more true for the rest of Europe.
So what about the bonus?
Bonuses are very variable especially during a recession. The bonus is more fixed at junior levels with larger differences between people at more senior levels. Bonuses can range from 0% to several hundred percent of base pay.
Some websites will try to correlate pay with years in the industry but this is one industry where tenure matters very little. I have seen Associates earning much more than VPs because they are adding more to the bottom line. That's how it works. Whether you're an MD or a department head is of little consequence compared to how much your department or team earned for the bank.
What does the structure of bonuses mean for you?
What does the structure of bonuses mean for your bank?
I created my investment banking blog in 2012 as soon as I resigned from i-banking & published my book, To Become An Investment Banker.
Initially published at girlbanker.com, all posts were later subsumed into my personal website under katsonga.com/GirlBanker.
With 7 years of front office i-banking experience from Goldman Sachs and HSBC, in both classic IBD (corporate finance) and Derivatives (DCM / FICC), the aim of GirlBanker.com was to make it as straight-forward as possible to get into a top tier investment bank.
I'm also a CFA survivor having passed all three levels on the first attempt within 18 months - the shortest time possible.