Monday, July 02, 2007
Investment Banking Bonus For 2007
This was taken from dealbreaker.com as I thought the table yielded a number of interesting conclusions. Its only mid-year and already people are speculating on the bonus pool. Mind you these are basically people with less than 5 years work experience (but may have a MBA already). To me the amounts are in line with a financial center investment banking bonus scheme. Though some indicated that the actual payments may be lower at the end of the year as second half activity could be flat.
Other interesting things that can be gleaned from the table are which firms were considered as Tier 1, and which were considered to be Tier 4. Goldman always tops the league as it rewards their staff aggressively. Merrill has to do the same to save from losing performers to Goldman, and also as a hiring strategy for new recruits to show that it is on par with Goldman. Lehman also pays well but for different reasons, it tries to project it is in the top tier when it is not.
Tier 2 tends to include the bigger bank based firms, or where banking forms a bigger slice of revenue contribution. In that sense investment banking business is not as critical to bottom line. Tier 3 consist of firms on their way down, or on their way up. On their way down: JP Morgan, Morgan Stanley and Bear Stearns. On their way up: Wachovia.
Tier 4 generally pays the least in investment banking bonuses. No surprise that financial juggernaut UBS is there. UBS will always remind you that people do business with UBS because it is UBS not because of the employees. UBS will always remind you that the firm is bigger than the sum of all employees.