The top five investment banks paying the highest bonuses in London this year are all American, according to a survey published on Wednesday.
Goldman Sachs had the highest average bonuses, at £194,000 a head for directors, followed by Morgan Stanley’s £170,000 and Bank of America Merrill Lynch’s £166,000, new research from salary benchmarking site Emolument.com show.
The Wall Street banks’ dominance of the bonus tables come as European lenders increasingly cede market share to US competitors in key areas such as mergers and acquisitions.
“For some time now we’ve seen US banks prepared to pay more in their investment banking operations, largely because they’re investing more heavily into them than many of the European players who have been revisiting their strategies for investment banking,” said Tom Gosling, head of PwC’s UK reward practice, adding that European banks are still “very competitive” when they are hiring candidates in key areas.
Deutsche, Royal Bank of Scotland, Barclays, UBS and Credit Suisse are among the European lenders that scaled back their investment banks in the aftermath of the 2007-2009 financial crisis. In a case such as UBS’s, swaths of activities have been abandoned, in others assets have been sold and activity levels reduced.
Mr Gosling added that US banks’ “overall firm-wide profitability enables them to pay better even in London”. Goldman had a return on equity of 11.2 per cent in 2014 — twice the 5 per cent reported by Deutsche and the 4.4 per cent at Credit Suisse.
Not all US banks had higher earnings than their European peers; return on equity at Morgan Stanley was 4.8 per cent for 2014, at BofA it was only 1.7 per cent.
Alice Leguay from Emolument.com said base salaries were rising to compensate for new rules capping the size of banker bonuses. JPMorgan had the highest average director salary in 2014 at £243,000, a year ago its average was £220,000, Emolument.com’s figures show.
At Société Générale, which is growing its investment bank, average directors’ salaries rose to £150,000 in 2014 from £123,000 a year earlier. The French bank’s salaries remain the lowest of the 15 banks covered by Emolument.com’s research.
“We expect to see base salaries shoot up in order to circumvent bonus cap regulations, especially at director and managing director level where employees expect to see their total comp (pay) increase substantially,” said Ms Leguay.
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