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TOP STORIESEven if banks cut MBA pay, it’s still worth it26 June 2008COMMENTS"Security", I will never be canned in this current downturn, I'm very confident of that. If you're good, and know how to play your cards right, you won't be fired. Read all comments »Landing a job in an investment bank is likely to be a lot more difficult for the MBA classes of 2008 and 2009, but if they can land a job (and this may be a big if), splashing out on the course will still be worthwhile.
Although Morgan Stanley is rumoured (Dealbreaker) to be reducing the amount it offers to subsidise US students struggling with MBA fees, recruiters this side of the Atlantic say generous banking sign-on bonuses are set to remain static.
In 2007 the average sign-on for a student going into banking after an MBA course was £22k, according to the London Business School. This year, Merrill Lynch has reputedly increased its sign-on pay from $30k to $40k to compensate for the falling dollar.
The head of MBA hiring at another US bank says sign-on payouts are set to remain static – “There’s absolutely no indication of them being slashed.”
Figures from recruitment firm Cornell Partnership indicate that average pay for a first-year associate in a bulge-bracket firm was around £110k last year (including £60k basic, £20k stub/sign-on bonus, and a £30k bonus paid in January); second-year associates earned £150k; and third years earned an average of £200k plus.
With the MBA course at LBS costing a total of £44.8k and students able to earn up to £12k during their summer internship, this suggests a net present value of £195k over four years (assuming the student starts work in July of his/her second year and the cash would otherwise be sat in a bank account earning interest at 6%).
Even if interest rates rise to 8% and bonuses are slashed, MBA students who manage to land a banking job will still be heavily in the black over a four-year period.
The big issue is, naturally, whether MBAs will be able to land a role in the first place and whether they will be made redundant before the four years are up. Some LBS MBAs are opting to work in Asia rather than London, and one says that those without summer internships are panicking.
The head of MBA recruitment at the US bank says they have reason to be panicking: “It’s going to be a lot, lot harder to land a role without an internship next year.”
COMMENTSgopanb, Thu 26 Jun 08My current title is Associate and I work in Credit Origination at top Canadian Bank. However, my slary is no where near to the numbers mentioned above. Is that because I dont have an MBA and/or Canadian Banks are considered as Tier 2 banks? and they dont pay as high as other american banks? Add your comment »Me, Debt / Fixed Income, Thu 26 Jun 08I know the Canadians (CIBC, RBC, TD etc) pay very low compared to the US houses or even the likes of DB, Credit Suisse and UBS. So my advice to you sir, is get out there while you have a chance. Add your comment »Dupshar Patel, Capital Markets, Thu 26 Jun 08"Average pay for a first-year associate in a bulge-bracket firm was around £110k last year; second-year associates earned £150k; and third years earned an average of £200k plus."
Vivek, Capital Markets, Thu 26 Jun 08Dupshar,
Dupshar Patel, FX & Money Markets, Thu 26 Jun 08Vivek, I don't know where you work but your numbers are laughable. Analysts get 50-100% of base? As a trainee who's been there 6mths maybe, but even after a full year on the desk grads get a MULTIPLE of their bonus - 100-150%, as was confirmed on a previous eFN article here. Pretty much EVERY 2nd year analyst I know at JPMorgan and GS got over £100k just in bonus end of last financial year. Even at Citi they got about £90k average. As an associate you'll VERY comfortably getting over £250k all-in after a full year on the desk. By the way I'm talking trading and sales, not IBD gimp work. Obviously if you work at an inferior bank my numbers will look like a fairytale to you. Add your comment »Sally, FX & Money Markets, Thu 26 Jun 08"Analysts 2/3 in FO typically get 50%-100% of base implying MAX = £100k"
Hugo, Hedge Funds, Thu 26 Jun 08"Vivek, I don't know where you work but your numbers are laughable. Analysts get 50-100% of base? As a trainee who's been there 6mths maybe, but even after a full year on the desk grads get a MULTIPLE of their bonus - 100-150%, as was confirmed on a previous eFN article here. Pretty much EVERY 2nd year analyst I know at JPMorgan and GS got over £100k just in bonus end of last financial year. Even at Citi they got about £90k average. As an associate you'll VERY comfortably getting over £250k all-in after a full year on the desk. By the way I'm talking trading and sales, not IBD gimp work. Obviously if you work at an inferior bank my numbers will look like a fairytale to you."
Analyst, Derivatives, Fri 27 Jun 08At Barcap FO first year analyst fix was £36 and £10 bonus Add your comment »SandT, Trading, Fri 27 Jun 08Do some of you realise that boasting about your pay is bad taste in the highest order? Only those with most limited talent would seek to a public forum to boost their ego by a) telling others how badly paid they are and d) boasting to the rest of the would how wonderfully paid they are.
gopanb, Fri 27 Jun 08If you work in Trading then yes you can make zillions as long as you bring revenue. However, I am quite skeptical to agree that first/second year anlaysts get £100K+ (both at JPM or GS) because a) they are still in training with the bank b)banks are not foolish to pay £100K+ who doesnt know much. Realistic figures would be around £50-£70K in my opinion. Dont forget that salary has been pretty much static for last few years!! Add your comment » |
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