Investment Banking Salaries in the UK 2024

Investment banking is among the highest paid jobs in the UK. Entry level analysts in London typically earn a base salary ranging from £48K - £69K, with total compensation (including bonuses) averaging between £84K and £165K. However, your take-home pay can vary based on various factors.

This article will help you understand the intricacies of investment banking salary in the UK. We'll discuss the salary structure, key factors that influence your pay, top-paying firms, how compensation progresses with experience, and how it compares to other high-paying professions in the country.

From Base to Bonuses: Understanding Investment Banking Salaries

The typical investment banking salary has two main components:

• Base salary: This is a fixed annual payment that the bank offers you at the start of your employment. Base salaries vary depending on factors such as experience and rank.
• Bonus: This is a variable component of compensation that can be substantial and is often paid annually. Bonuses are calculated based on factors such as firm's profitability, performance, deal size and complexity, and economic conditions.

In addition to performance-based end year bonuses, you can also receive the following in your pay package.

• Signing bonus: New hires often receive a signing bonus, which is a one-time payment given for accepting the offer. It often comes with conditions like working for the bank for a specific period of time to receive the full bonus.
• Stub bonuses: Employees who join mid-year don't get the full end-year bonus. Instead, they get a standardized amount, called stub bonus, based on the months worked.
• Stock options: These provide the opportunity to get part of the bonuses in form of the bank's stock.
• Performance-based awards: You can also get other discretionary bonuses especially if you're an exceptional performer. These are often linked to specific revenue generation or deal origination metrics, especially for higher-level positions like directors and managing directors.
• Benefits packages: Investment banks often offer competitive benefits packages, including health insurance, retirement plans, and other perks.
   

Which Factors Influence Your Salary in Investment Banking?

Your investment banking salary in the UK is influenced by several key factors. Let's look at the most influential ones below.

Location

As the major financial hub in the UK, London offers the highest investment banking salaries. This is a result of the concentration of top-tier firms and high volume of deals in the city.

Investment bankers in other cities might get lower compensation especially if there's no competition for top talent among financial institutions. The cost of living in a region also impacts the pay. Globally, bankers in London make less compared to those in New York.

👉 Check out our article on Investment Banking Salaries Worldwide to find out what you can make in your region.

Experience and Rank

Your industry experience in investment banking often determines your rank. In turn, your position impacts the pay a bank can offer you. As an entry level analyst, you'll typically have limited experience and earn base salaries in the lower range of the investment banking pay spectrum. The earning potential increases as you gain more years of work exposure and develop expertise.

Performance

Investment banking is a meritocratic environment. Bonuses are directly tied to your individual, team, and bank's performance. If you're a high performer, you can bag big bucks especially during favorable economic conditions. Banks also like to retain professionals who bring results and revenue, and often offer higher bonus ratios to such.

Bank Size

Salaries tend to be higher at larger, bulge bracket firms and elite boutique banks. One interesting trend is that some boutique firms offer total compensation packages that exceed what analysts at bulge bracket banks receive. These firms pay competitively to attract and retain professionals with specialized skills or experience. They also have good deal flow which can lead to higher per-deal bonuses.

On the other hand, smaller regional or mid-sized firms offer the least investment banking salaries due to smaller market share and revenue.

Product Groups

Different areas in investment banking may lead to compensation differences. Bankers who provide advisory services to clients, such as M&A or restructuring, often earn higher salaries in times of high market activity. That's often because they get to execute more deals and get higher bonuses.

The firm's specialization can also impact your pay. For instance, the banks getting high deal flow in sectors like tech, energy, and health often have higher deal value leading to higher revenues.

What Are the Top Paying Investment Banking Firms in the UK?

Top Paying Investment Banking Banks: Bulge Bracket Firms

The average base salary for entry level analysts at the largest investment banks in the UK, known as bulge brackets, ranges from £50K - £70K. Performance bonuses vary widely which lead to differences in total compensation among these banks. JP Morgan Chase and Citigroup lead with an average total pay of £95K. Goldman Sachs follows closely with £92K while Morgan Stanley, BofA, and Barclays follow with £90K.

Elite Boutique Firms: Top Paying Investment Banks in the UK

Contrary to popular perspectives, some elite boutiques offer investment banking analysts higher compensation than the largest banks. Centerview Partners, Evercore, Houlihan Lokey, Moelis, Perella Weinberg, PJT partners, Rothschild, and Wells Fargo pay analysts a total package of more than £100K. This is typically more than what most of the bulge brackets provide.

Among the boutique firms, Houlihan Lokey seems to offer the highest bonuses ranging £30K - £80K. Moelis follows with £34K - £63K and Centerview with £50K - £55K, then Wells Fargo with £20K - £56K.

Centerview has the highest base pay of £55K - £95K followed by Perella Weinberg with £70K - £85K. Nomura offers the least base pay among the top boutique firms of £50K - £60K.

From Analyst to Managing Director: How Investment Banking Salaries Progress

As you can tell from the table above, investment banking salaries in the UK increase significantly as analysts gain more experience and move up the ranks.
First year analysts in London earn an average total compensation of £84K. This can rise to six figures within a few years, sometimes exceeding £150K by the third year.

Associates typically have two or three years experience in the industry, and can earn an average of £155K - £255k annually.
As you ascend the corporate ladder to vice president, director, and managing director levels, the pay increases substantially. The base salaries are in six figures, but the total compensation can cross the seven figure mark for top performing VPs and MDs in large banks.

How do Investment Banking Salaries Compare to Other Industries?

Entry level investment banking analysts in the UK earn an average base salary close to or sometimes higher to senior professionals in other well-compensated professions. In their second or third years, IB analysts can take home more than individuals in the most sought-after positions like software engineers, managing consultants, tax accountants, chief financial officer, lawyers, actuaries, data scientists, marketing directors, and cyber security specialists.

These are among the highest paid jobs in the United Kingdom, showing how lucrative a career in investment banking can be. The earning potential increases with experience and rise in rankings which can double or triple an investment banker's income as they scale up the corporate ladder.

Key Takeaways

• Investment banking is among the most highly compensated jobs in the UK with an entry level analyst earning an average total compensation of £84K per year.
• The salary structure in investment banking typically consists of a base pay and bonuses. End-year bonuses are the most common but you can get other types of bonuses including stub bonus and signing bonus. The compensation package might also include stocks, benefits, and performance-based awards.
• Your investment banking salary in the UK can be affected by the location, bank, product group and sector, individual performance, experience, and rank.
• While bulge bracket firms offer high salaries and prestige, some elite boutique investment banking firms like Centerview Partners, Evercore, Houlihan Lokey, Moelis, Perella Weinberg, PJT partners, Rothschild, and Wells Fargo pay entry level analysts higher total compensation.
• The salaries and bonuses increase significantly as you climb the investment banking ladder, with senior top performing positions like MD earning total pay in the seven figure mark.
• Entry level investment bankers at the top paying firms sometimes earn more than top professionals in other well-compensated careers like consulting, software engineering, and marketing.