Bankers' Bonuses: 2016 In Review: Sales Lead, Origination In Last – ValueWalk Premium
Bankers' Bonuses

Bankers' Bonuses: 2016 In Review: Sales Lead, Origination In Last

In its latest study, based on 648 VP working at London investment banks, Emolument.com looks back at 2016 bonuses. M&A bankers did not benefit from their 2015 record deal volume yet, with bonuses down 20% from the previous year across the market. Yet they remain the highest paid City professionals in 2016, thanks to decreasing and stagnating bonuses in origination and trading.

2016  median bonuses

Bankers' Bonuses

Bankers’ Bonuses

Bankers’ Bonuses
  • M&A bankers did not all benefit from a record-breaking 2015: some M&A bankers were surprised to discover their bonus was down 20% and more compared to 2015, even though the volume of deals for that year was the highest ever recorded*. A bonus increase is to be expected in 2017, when most of the M&A deals will have closed and fees have been paid.
  • …but they’re still doing better than everyone else ! With traders’ bonuses unchanged from 2015 (£65,000), and origination professionals’ down by 30%, M&A bankers earned the biggest bonuses in 2016 (£80,000).
  • Not good enough: sales and research professionals’ bonuses still don’t come close to M&A bankers’, despite an uptick in 2016.

Bankers' Bonuses

*BAML,Goldman Sachs,JP Morgan, Lazard, Morgan Stanley.

  • It all makes sense : the best performers of 2015 on the European M&A market did actually boost their staff bonuses by 25%, up to £125,000 for VPs. On the other hand, those which did not have access to the recent spate of super deals and super fees cut their M&A bankers bonuses by 16%.

Were bankers happy with their 2016 bonus?

(% of professionals who said they were happy with their bonus)

Bankers' Bonuses

Bankers’ Bonuses

  • An unhappy bunch:  most bankers are  unhappy with their bonuses. Traders, despite having the second highest bonuses in these rankings, are among the least happy of banking professionals (only 23% of them were happy with their 2016 bonus).
  • What did you expect?  After seeing their bonuses decrease by 30% from 2015, only 17% of origination professionals were happy with their 2016 paycheck.
  • M&A : wait & see. Even though their bonuses dropped sharply from 2015 (-20%), M&A professionals’ satisfaction remained at a similar level (38% in 2015 vs. 40% in 2016). The drop in their bonus might have been easier to swallow knowing they can expect a much higher one in 2017. If that’s not the case, their satisfaction level is likely to plunge.

Alice Leguay, Co-Founder and COO at Emolument.com said: over the last couple of years we have seen a huge polarisation in bonuses especially in mergers and acquisition. This applies to specific banks: those who have access to the high flow of deals and fees, versus the non-performing banks in M&A. This polarisation also applies to individuals with banks choosing to either give out “doughnuts”, ie: zero bonus, and retain resources in order to pay outstanding professionals outstandingly well.

*http://www.wsj.com/articles/2015-becomes-the-biggest-m-a-year-ever-1449187101

*Source for top banks in European M&A : http://markets.ft.com/data/league-tables/tables-and-trends/mergers-and-acquisitions

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