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On Investment Banking

How much do investment bankers earn?

19/7/2012

6 Comments

 
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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 usually relatively uniform across the firm for people of that level. 
  • The bonus varies according to how hard you work and of course how great an ass licker you are! Some people really know how to work the system. 

Base pay is very transparent so let's start with that:

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Excerpt from To Become an Investment Banker
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? 
  • Don’t spend it until you get it. 

What does the structure of bonuses mean for your bank?
  • In challenging years, they can cut costs significantly by chopping the bonus pool.
  • In profitable years, they can share the success with their most valuable asset: the people.

Who is Girl Banker® and how can she help you?

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6 Comments
Biraj Patel
11/8/2016 07:08:43 am

Does this apply for IBD and capital markets ? I ask because I want to go into front office sales but I hear so many contradictions about the role on the internet. Please help me with my understanding and clear confusion girl banker !!!

Reply
Heather as "Girl Banker"
11/8/2016 07:09:46 am

Hi Biraj,

For base salaries, totally.

BONUSES
In the first couple of years IBD and Sales or trading bonuses will tend to be more or less similar. After that, if you want to make money in sales but go for sales roles that make money!

In IBD you work on big deals as a team and even if you close one deal, if it's a big one then there's plenty of money to share around for bonuses.

In sales, if you go into a low margin sales role e.g. developed market equity sales you would have to be working with huge clients to make a decent bonus. Sales roles with high margins include anything derivatives related and emerging market desks.

Almost any sales role in an emerging market will make money because of high demand.

Hope this helps,
GB

Reply
Biraj
11/8/2016 07:10:43 am

Thanks a lot for that girl banker !

I will keep that in mind when applying for my graduate schemes :)

Manny
11/8/2016 07:11:22 am

Hi Heather, does this include back and middle office staff like the finance department? I read somewhere that base salary is lower for middle/back office staff...Please clarify...
Regards...

Reply
Heather as "Girl Banker"
11/8/2016 07:11:47 am

Yes, base salaries will be lower in back office and middle office.

I generally speak about front office as I have no back & middle office experience.

My best
Heather

Reply
Manny
11/8/2016 07:12:41 am

Thank you very much.




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    Girl Banker®

    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 have now been subsumed into my personal website under katsonga.com/GirlBanker.

    These blog posts make it as straight-forward for you as possible to get into a top tier investment bank. 


    I have 7 years of front office i-banking experience from Goldman Sachs and HSBC, in both classic IBD (corporate finance) and Derivatives (DCM / FICC).

    ​I'm also a CFA survivor having passed all three levels on the first attempt within 18 months - the shortest time possible. 
    ​
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