While banking is a lucrative career, all banks are not equal. Here, we shed some light on some of the crucial aspects: which are the best paying banks overall and also who will share profits with junior bankers the most?
The salary-benchmarking site Emolument analysed 1,433 salaries from Managing Directors (MDs) and Associates in London to create a league table of the best paying banks.
Emolument found that J.P. Morgan pays its MDs 35 percent more than runner-up Morgan Stanley. Also, MDs at Deutsche Bank and Barclays are rewarded as generously as they would be working for a U.S. bank.
At MD level, bonuses represent 37 percent to 70 percent of total compensation. As for junior bankers, don't be fooled, working for a bank which pays its MDs the highest doesn't necessarily translate into higher remuneration for Associates.
In the House of Morgan
For MDs, J.P. Morgan tops the list of best paying banks with a staggering median total compensation of £919,000, 35 percent more than the runner-up Morgan Stanley. For Associates, Morgan Stanley takes the lead paying its employees 26 percent more with J.P. Morgan falling behind on 7th place.
So, start at Morgan Stanley as an Associate, and then move to J.P. Morgan at a later stage of your career!
A Crushing First Quarter
U.S. versus European Banks: U.S. banks feature heavily in the top five, both at MD and Associate levels, with a few incursions from European banks, despite the fact that they have consistently under-performed their U.S. competitors since 2009: Deutsche Bank MDs make as much as the ones at Goldman Sachs.
Will the crushing first quarter of 2016 at Barclays and Deutsche Bank push bonuses down, or will the banks invest in attracting and retaining key players amidst their restructuring?
Stick around for large bonuses: MD bonuses represent 37 percent (UniCredit) to 70 percent (J.P. Morgan) of total annual compensation. On the other hand, for Associates that number falls between 13 percent (Lloyds Banking Group) and 38 percent (Goldman Sachs).
Fairness Index Launched
To study how fair the distribution of funds is within each company, Emolument created a «Fairness Scale». They chose the maximum of the scale to be 20 points for demonstration purposes.
By calculating the percentage of «Total Associate Salary» to «Total MD Salary» they attributed all 20 points to the «fairest» company (Credit Agricole) with the highest percentage (30 percent) and gave the remaining companies points accordingly.
What is Fair in Business?
Credit Agricole, Société Générale, Commerzbank and Credit Suisse, banks with the lowest MD earnings score the most fairness points, while J.P. Morgan, the bank with the highest paid MDs, comes last by a wide margin.
If J.P. Morgan was as «fair» as Crédit Agricole it would pay its MDs £788,000 instead of £919,000 and increase Associate annual compensation to £236,000 from £105,000.
Alice Leguay (pictured above), Co-Founder and Chief Operating Officer at Emolument said: «We expect that our Fairness Index will vary from one year to the next depending on the bank's needs to retain certain generations of employees. As we saw this year, Associates across the board saw a substantial bump up in their bonuses, while in the previous couple of years, they had been overlooked in favour of revenue-generating staff such as MDs and Directors.»
