December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

The three small banks paying the biggest junior salaries after a year of hikes

When JPMorgan hiked junior banker salaries for the second time in six months in January, it set off a chain reaction among its rivals. Analyst pay spiralled by 40% as firms grappled with an exodus of talent. 

The biggest investment banks in the City were keeping pace with Goldman Sachs, which increased entry-level pay to £70,000 in London last year after a group of analysts leaked a PowerPoint presentation outlining 100-hour weeks and declining mental and physical health.

£70,000 is now the norm at large investment banks in the City, compared to £50,000 in 2020.

But beyond the largest investment banks, a group of smaller players have increased salaries to move ahead of the pack.

READ Why overstaffed teams and bad attitudes mean junior banker jobs are under threat

A February salary increase at specialist fintech advisor FT Partners pushed entry-level pay to £85,000, Financial News reported. Meanwhile, another specialist technology boutique, Arma Partners, also increased starting salaries to £85,000 this year, according to people familiar with the matter. 

An Arma Partners spokesperson declined to comment.

PJT Partners, a boutique investment bank run by former Morgan Stanley dealmaker Paul Taubman, raised salaries for first-year bankers to £80,000 in August, according to juniors. The starting salaries put these three banks ahead of their bulge bracket rivals on graduate pay.

Smaller banks typically pay more than larger rivals in a bid to attract top students amid fierce competition from Wall Street and European rivals. Bonuses are set to be squeezed in 2022, so bigger salaries may prove to be a major selling point next year. JPMorgan cut analyst bonuses by 52% in August as deals dried up, and most big banks have followed suit. 

The bidding war for junior bankers is finally starting to wane. With exit options in technology and crypto drying up, juniors are increasingly choosing to stick with banking, FN reported. However, bigger salaries, a lack of willingness to put in long hours, and a darkening outlook for deals has led many banks to cut their ranks of juniors for the first time in years.

“Salary inflation over the past year has created an unusual situation where juniors are now a fairly significant cost base,” one head of leveraged finance at a European bank told FN previously. “If there’s not much activity, having juniors just hanging around as a nice-to-have is no longer viable.”

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To contact the author of this story with feedback or news, email Paul Clarke