by Brian DeChesare Comments (73)

2012 Investment Banking Bonus Predictions: Has Your Bank Account Been Occupied?

2012 Investment Banking Bonus PredictionsI’ve been getting requests to publish this year’s investment banking bonus predictions.

And I’d like to fulfill those requests, but there’s one small problem: there will be no bonuses this year.

Normally investment banks wire transfer analysts’ bonuses directly to their bank accounts upon announcing the numbers…

This year, however, it was revealed that protesters had Occupied the bank accounts of all analysts worldwide, hacking into banks’ websites and stealing all the funds before anyone could withdraw the money and blow it on a trip to Vegas (or a trip to Cain).

It’s unknown what the protesters will use funds for, but early rumors point to using the money to send envelopes containing white powder to banks worldwide.

Good luck getting those bonuses back!

My Sympathies for the Protesters

Ok, now back to non-fiction mode… even though I’ve mocked the protesters before, I actually agree with a lot of the points that they’ve raised:

  • The world (or at least the US and other developed countries) is not headed in a positive direction, and serious changes need to be made.
  • Tax rates for those in the highest brackets must be raised – sure, cutting spending is necessary as well but you need to do both to reduce deficits.
  • Carried interest and capital gains should be taxed at ordinary earned income rates. As Warren Buffett stated so eloquently, “People invest to make money, and potential taxes have never scared them off.”

I do find their entitlement attitude (“We deserve jobs!”) concerning, but hey, many people in the finance industry act that way too – just read this article for the time I almost poked my eyes out and jumped in lava after getting one too many emails expressing a similar attitude .

Anyway, this bonus prediction article is not about the Occupy movement, but you can’t deny the impact they’ve made this year and how they’ve made terms like “The 1%” part of everyday lingo – further fueling the downward pressure on bonuses in finance (and Mitt Romney’s Presidential chances).

What Else Happened in the World This Year?

It’s quite similar to the news from last year: emerging markets surged ahead as developed countries fell further and further behind and further in debt.

Europe continued to be a mess and Greece had to be bailed out… again? I’ve lost count of how many times some type of rescue has been made, attempted, or proposed by now.

The main difference this time around is that there’s a lot more discussion around what these problems mean, and what to do about the growing inequality in many regions.

John Paulson had the best solution of anyone: start sucking and lose a ton of money for all your investors.

Do more of that and more often, and we might just see all this talk of class divides and The 1% go away completely.

Bonus points if you decide to quit the industry and make a public spectacle of it.

Our (Flawed?) Prediction Methodology

Once again, we’re going to use the same methodology we’ve used to predict bonus numbers in previous years.

Yes, it’s flawed and perhaps not as accurate anymore, but this is the best we can do without hiring a spy to infiltrate banks’ compensation committees.

We’re assuming here that bonuses for bankers are directly tied to banks’ investment banking revenue – revenue from trading, brokerage, asset management, commercial banking, and other business lines doesn’t factor in at all.

To get these numbers, we can only use publicly traded banks – that’s why there are no numbers for Moelis, Perella Weinberg, Centerview, and so on (this is mostly directed at the one reader who thinks I’m always excluding Centerview just to spite him/her).

To sum up the assumptions:

  1. IB bonuses will be awarded in direct proportion to investment bank net revenue.
  2. Banks still determine bonuses based on a percentage of investment banking revenue – historically close to 50%. Yes, it’s great to have few expenses aside from headcount.
  3. Analyst numbers are based on the Trailing Twelve Months (TTM) numbers from June 30, 2011 through June 30, 2012 – not calendar year 2011 numbers.

If your attention to detail is good, you know that TTM numbers from June 30, 2011 – June 30, 2012 are not yet available, so I’m basing the Trailing Twelve Months figures here off of March 31, 2011 – March 31, 2012 numbers.

Bulge Bracket Numbers

Let’s take a peek at the damage:

So… things were down, I guess you could say. The main cause was the massive slowdown in deal activity in the second half of 2011.

And remember: even though we’re in 2012, that big slowdown at the end of 2011 will still hurt you since bonuses are based on the trailing twelve months.

Even if you threw out that theory and assumed it wasn’t true, the most recent quarter YoY numbers don’t paint a pretty picture either: almost everyone was down by a lot due to the overall slowdown in M&A and capital markets activity.

Boutique Numbers

When I first started collecting the boutique numbers, I thought they looked a lot better – until I had finished the whole list:

The main difference in this set is that there’s a lot more variability. Firms like Evercore appear to have done quite well, while some of the others here have done… not so well.

However, I wouldn’t read much into the specific differences: revenue is always “lumpier” at smaller banks because it’s more dependent on a few big deals getting done by the end of the year or quarter.

The overall story we get from these numbers is similar: a big slowdown at the end of 2011 and a slightly better start to 2012, though still down from the previous year.

And the Magic Number Is…

In case you’ve forgotten, last year’s numbers for analysts were:

  • 1st Year Top Tier: $60-70K USD
  • 2nd Year Top Tier: $75-85K USD
  • 3rd Year Top Tier: $90-105K USD

Based on the data above, we’re in for a 15% drop in bonuses this year. So here’s what I predict (using round numbers):

  • 1st Year Top Tier: $50-60K USD
  • 2nd Year Top Tier: $65-75K USD
  • 3rd Year Top Tier: $75-95K USD

Based on what we’ve seen so far with bonuses for more senior people in 2011, these predictions might be too tame and bonuses could fall by more than this.

Wait, Are You Sure?

I’ve seen a few comments asking whether or not bonuses will hit $0 or $5K or something really low this year, but I don’t see that happening across the board at most banks – the data just doesn’t support it.

We’re (still) very far from what investment banking revenue looked like at the true “bottom” back in 2002.

Banks these days might be allocating a lower percentage to bonuses, but it’s hard to quantify without knowing the specific percentage that each one is aiming for.

Goldman Sachs actually awards analyst bonuses at year-end now and the numbers there are lower than what I’ve predicted above, but still higher than $0-5K.

More Variability?

There may be a lot more variability between individuals within groups and between different banks this year.

That’s already supported by the senior banker pay numbers that have been released, and we could see more of that at the junior levels.

You shouldn’t necessarily accept or decline job offers based on the bank’s expected bonus payout, but as you move up that variability will become more and more important because it affects senior people far more.

Other Changes in Compensation

You’ve already seen how more and more of senior bankers’ pay comes in the form of deferred compensation and stock – we may see more of that at the junior levels very soon.

Maybe analysts will still be paid 100% in cash, but non-cash bonuses will start to become more common even at the associate level – it seems to be happening already.

…which should just prompt more people to move to hedge funds and other buy-side roles that aren’t as heavily regulated.

But What About Other Countries?!!

It depends on which other country you’re in. Numbers will be similar in places like the UK or Europe, but in the local currency instead.

In emerging markets there’s a wide range of outcomes because there’s a dearth of talent in countries like Brazil, which makes bonuses there significantly higher (as in, 2x higher than NY / London numbers).

In countries like China, on the other hand, pay at local firms will be much lower, despite the frothy market, because they can afford to pay less.

I already know someone is going to leave a comment about Australia or Hong Kong, so let’s address those upfront as well: base salaries in those regions tend to be higher and all-in compensation can be higher as well.

So yes, effectively there’s a good chance you’ll make more in those regions, and that you’ll pay much lower taxes in the case of Hong Kong.

Should You Still Go Into Finance?

The obvious response here: “What else would you do?”

The “hot” field nowadays seems to be starting your own startup – and just think, you don’t even need an idea!

Having worked in both finance and at startups, I am skeptical of whether or not startups will really “displace” finance because:

  1. There’s no guaranteed or semi-guaranteed payday (forget about predicted bonuses).
  2. Most work at startups is actually taxing, annoying and not glamorous at all.

I think it’s great that there’s more interest in starting companies, but starting a company and then sticking with it over years or decades are very different.

And, as Dustin Moskovitz says above, many people would be better off joining existing projects with proven ideas.

So in the absence of your own great idea, I’d say you will still try to get into finance anyway – even if bonuses are a disaster this year.

Historical Bonus Predictions & Actual Numbers

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Brian- Sorry if this is a dumb question but when are bonuses typically paid out? In other words, if you’re an analyst, when do your supervisors notify what your bracket and bonus $ is, and when around when does it hit the bank account?

    Is it mid July or late August? or early Sept? This question is referring strictly to investment banking analysts, middle markets and bulge brackets. 1st/2nd/3rd yr analysts

    1. M&I - Nicole

      It depends on the bank and region. Usually 1Q after Jan/Feb.It usually hits the bank account a month after notification (depending on when you usually get paid and your bank’s policy.)

      1. You sure? That doesn’t sound right or at least not what I’ve heard/think. If it were around Jan/Feb, that means 1st years can quit after 6 months (assuming they start in July) and still bank their bonuses? How would the bank even determine who’s the top analyst after just 6 months? Can you clarify…

        1. To clarify: most analysts start in the summer and work until the summer. Then they get paid their bonuses in the summer.

          If a bank pays an analyst bonus at the start of the year, the analyst still starts in the summer. And he receives a “stub bonus” at the start of the next year only for the 6 months worked so far.

          Most banks still do #1 above and pay out in the summer, but some such as GS have been changing to #2.

          I think Nicole was referring to how everyone else at the bank (above analysts) is paid which is at the beginning of the year.

          1. Thanks for clarifying Brian. Hope I didn’t come off as rude. Didn’t mean it that way in any way

  2. When are the 2013 predictions coming out?

    1. In about 3 weeks, waiting on the graphics design. But I’ve already done the math: expect a 10-20% increase in bonuses over 2012 numbers.

  3. What is going on this year? This is coming out about Macquarie. How could they do this and expect to stay competitive? 10k bonuses to first years…(70k base)? It makes no sense.

    1. M&I - Nicole

      It doesn’t matter. Some people may leave, some people may stay. But demand for these jobs are higher than supply so there’ll still be good people who want to work there. Markets aren’t great so bonuses reflect that.

      1. Can we expect similar moves by other firms?

        1. M&I - Nicole


  4. DrFeelGood

    Hahaha… now bankers even got their own app to compare their bonuses.. too funny. I recon that @ $11.99 RBS guys will not be able to afford it though hehehe

    1. They’re the smart ones…

      1. DrFeelGood

        Smart Bakers?? That’s a nice oxymoron ;)

        1. DrFeelGood

          Bakers Bankers?

  5. FIGBanker

    I understand that the assumption here is that top tier would be 50-60k. Firms paying in the January cycle gave out 40-60k for 1st year bonuses(bottom through top). Assuming these figures are correct and one argues that the environment is better now than back then, do you think these numbers would get bumped slightly?

    What are your thoughts for European banks (BNP, SocGen, DB, CS, etc.) since they’ve been hit the hardest?

    1. M&I - Nicole

      I’m not familiar with the figures so I’ll leave this question to readers in those banks to answer

  6. Hi, I am currently doing an internship at GS and I realized that I’d like to switch over from IBD to S&T. However, I first want to do a finance program like at princeton. If I screw this internship up, will my mid summer review come back to haunt me 2-3 years later when I want to apply again?

    1. M&I - Nicole

      Probably, if you ask for references and reapply to GS. I wouldn’t think of “screwing” this internship over. Try your best to do well.

  7. when are the 2012 actual numbers coming out?

    1. When bonuses get announced this year, usually late July or early August.

  8. Well this isn’t the trend one wants to see, if you want to be involved in the field of IB.. Maybe, things might pick up again for the gents in IB and maybe, just maybe we will see a repetition of the 2007 predictions occurring again, as a growing trend. *fingers crossed hopelessly?*

    1. M&I - Nicole

      It may happen … some people still get paid decent bonus, though I’ve heard that quite a few people aren’t satisfied with the numbers. Things may take a while to pick up.

  9. killmenow

    So it is true, financial analysts at Facebook (god knows what they do) gets paid better than investment bankers. This is alarming!

    1. Actually don’t know if that one is true – maybe if you count equity pre-IPO, but I doubt that a mere analyst at Facebook makes $150K or anything in that range, in all cash.

  10. Hi Brian,

    Would you know the situation at regional banks IB (such as wells fargo, Pnc and others? I know they pay the same base of 70 but do they allocate bonuses the same way as the bulge brackets do? And do they also follow a summer schedule?


    1. Yes they follow a summer schedule – the larger ones (Wells Fargo is definitely not a “regional boutique”) should pay roughly the same as other large banks. If it’s a real regional boutique (i.e. 1 location and < 10 employees) bonuses might be about 50% of what you would earn at larger places.

  11. Incoming Analyst


    Big fan of the website. Are you taking into account banks hiring/firing analysts to match with business? If investment banking revenues are down 10%, but the analyst class is 10% smaller shouldn’t the bonuses be the same?

    1. Not taking that into account because it’s hard to find data on the specific number of analyst hirings / firings on a per bank basis.

      There may be some variations based on that but overall analyst pay is tiny next to senior banker pay so it doesn’t make a huge impact – banks care more about what other banks are paying to analysts than what they “can” theoretically pay using their own funds. And generally IB revenue determines what direction bonuses move in.

  12. Hi Brian,

    A closely related question: What kind of package an associate (1st, 2nd and 3rd year) should be expecting this year?

    I have read with a great deal of interest your article on IBD hierarchy ( but I was wondering how the crisis has affected those numbers (actually, I should be asking, how big is the damage?)

    Assuming a 3rd analyst makes USD 90K + USD 85K (middle of your range) = USD 175K, what kind of salary increase a newly-promoted associate should be expecting in terms of base salary (110K? 130K?) ?

    Can you also give us an idea about 2nd and 3rd year associates?

    I know bonus are by definition volatile but what could be expected this year for associate level positions?



    1. Yes, something in that range for base salaries. And they do not change all that much as you move up – even base salaries for senior bankers tend not to be that high (think even MDs are in the $150K-$200K range?). Bonuses for associates – the numbers in that article above are still accurate but the difference is that more is in the form of deferred and/or stock-based compensation. Bonuses might be 50% of your base salary in a bad year and then move up to around 100% in a better year. Beyond that they might go up to around 150% – 200% of your base salary as you move toward 3rd/4th year associate.

    1. Hah, well this is why Lehman was last on this list in ’08…

  13. That’s still not a bad amount of money, especially compared to other recent college grads!
    I know this is kind of a long-term question but do you think bonuses will be higher by 2016 (the year I graduate college)?

    1. Really hard to say. And by then you have to take into account inflation and all. Best case is they may go up slightly but I don’t think we’ll see 2007-like numbers.

  14. I’m dying to see you do a SG version.

    A Singaporean Reader

    1. I would like to, but the data is harder to come by. Most comp surveys are for the US / UK.

  15. Hey Brian –

    What % of analysts typically get a top-tier bonus? Any idea what the “average” bonus is relative to top? I can imagine some banks giving out the top bonus to a tiny fraction of their analysts to make themselves seem good, while paying the rest a significantly lower amount. Any truth to this whatsoever?

    Thanks for all the great work you do on this site!

    1. Very few – bonus might be lower by around $5-10K by tier. When times are good lots of analysts are ranked in the top tier, but as the economy gets worse that percentage falls. So this year I would expect it to be a lower number.

  16. Great article. Nice to see the assumptions and variables etc. instead of just the straight numbers. Loved the “(this is mostly directed at the one reader who thinks I’m always excluding Centerview just to spite him/her)” comment btw!

    1. Thanks! Yes, I’m still waiting for the Centerview reader to re-emerge…

  17. Great article. Will the Facebook IPO have an impact on MS’ numbers?

    1. Only for the senior bankers involved who actually won them the deal, since they are judged almost 100% by fees generated.

  18. morange

    ha, i can see a lot of soul searching going on now

    1. Well that is the point of this site, after all…

      1. morange

        but that’s not the point of the other site. Soul searching should be abandoned here, unless you wanna see a flat top line of your business..

        1. Relax, I was joking. :) I still think IB is a great field to start out in even if the pay is lower. As a long-term career, maybe not as much anymore, but it still leads to good options down the road.

          1. aGREED

  19. EngBanker

    50k isn’t worth it. Just my opinion.

    1. Yeah, definitely a disappointment from previous years but really, after taxes, not all that much different from numbers the past few years. And still better than 2009.

  20. Michael

    What does year end bonus for gs mean? If u start in july, do u get pro rated bonus in December?

    1. Yes. They started doing that to keep bonus timing aligned at all levels.

  21. Martin

    What is the “division of labour” at S&T within BB? How many guys do really trade instead of executing orders or cold-calling clients?

    1. The junior people (mostly 1st/2nd year analysts do most of the grunt work). Beyond that they don’t keep you around if you don’t start producing quickly.

  22. What do you think public finance roles will receive (saw your great public finance article recently)? I know that MS has it in S&T while Goldman is in IBD. Do you think that IBD public finance in goldman is similar to the bonus numbers?

    1. Yes, at bulge brackets the numbers will likely be similar (even if it’s classified under S&T). At boutiques you will see a bigger difference because there’s less to go around.

  23. couchy

    how about S&T?

    1. S&T is generally close to IB bonuses at the analyst level, but once you become a producer (i.e. start making actual money) then it becomes all about performance and how your desk has done as well. So it’s much harder to come up with meaningful averages there.

  24. Terrell

    What’s the salary for an Principal level in the IB WORLD?

    1. If you’re asking about Principals as in Senior VPs, there are some numbers here: Range is $300K – $1MM USD and heavily dependent on performance.

  25. Andrew

    Great info! I wonder if you, Brian, are planning to do some research of Russian IB market. Would be interesting to read.

    1. Thanks! Yes, an interview on IB in Russia is coming soon. And it is a very good one (one of the more in-depth regional features).

      1. Andrew

        Fantastic! I work in Belarusian IB and think of relocating. Thanks for such a prompt answer and good luck with M&I project.

  26. Not yet a banker

    Wait, so these numbers a purely bonuses right? So a first year would be making 50k-60k+base?? How much is the base?

    1. Base is $70K for first years, $80K for second years, $90K for third years (differs in some regions). So all-in you’re still looking at $120K+ at the entry-level.

  27. cfa2ib

    Brian, do you have a similar estimate for 1st and 2nd year Associates?? Thanks!

    1. Associate data is harder to come by and their bonuses are awarded at year end so I don’t include it here – but the numbers this year were down by even more for associates, with base salaries falling in some cases as well (

      1. Brian,

        Is is possible to haircut Lehman data from 2007 to come up with Associate / VP / MD ranges?

        Also, how did the top-ranked first year associate make $600k in 2007?

        1. 2007 was so different I don’t think you can even do that reliably. I really, really doubt if the top 1st year associate really made $600K – seems very high even for ’07. Maybe one person but everyone else was likely half that or less.

          There are some services that do formal comp surveys so those may be helpful – hope to write about one in the near future.

  28. Great stuff !

    1. I’ll assume you mean the commentary and not the bonus numbers. :)

  29. morange


    desperate enough?

    somehow I had the impression that many banks distribute bonus at year end even at junior levels?

    1. Most do not. GS is one exception but the others still do it in the summer.

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