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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.”
COMMENTSDupshar Patel, FX & Money Markets, Fri 27 Jun 08gopanb, you are making up estimates, whereas I am giving reality based on years of experience and knowing what I and my peers have been paid (have seen other people's bonus slips). You are completely wrong that a 1st/2nd year analyst is just training and doesn't know much. At the top banks you spend a few months intensively learning and then off you go with your own book. Even salespeople make a £40-50k bonus in their 1st year and 6 figures thereafter. Its easy for a young new grad to make good money doing basic stuff.
SandT, Trading, Fri 27 Jun 08Mr Patel, I did not personally mentioned you in my remarks. But I guess when I mention people that like to talk about their massive pay is a pointless ego boost - you seemed to have proclaimed "that's me!". However, as I have no idea who who are, I will not caste any personal dispersions about you - that would be a very low altitude thing to do... Add your comment »gopanb, Fri 27 Jun 08Guys lets not get emotional about what other mite think. Its a discussion board and everyone has their own rights to comment!! Add your comment »Security, Debt / Fixed Income, Fri 27 Jun 08All the chest beating about pay won't mean a thing when a security guard on £11 an hour escorts you from the building after you've been canned. Add your comment »Dupshar Patel, FX & Money Markets, Sat 28 Jun 08"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. Even if your desk is in trouble you'll be redeployed elsewhere if you've networked well with senior MDs who like you. Add your comment »Vik, Consultancy, Sat 28 Jun 08Dupshar, it's funny how a "top guy" like you fails to understand the simple meaning of the word "average"... but your failure to understand it allows you to boast how much you and your "peers" make per year. Good for you, good for you... but then again, you are right, you shouldn't let "inferior detractors take away your achievements". I can only imagine how fulfilled your life must be... Add your comment »HP, Hedge Funds, Sun 29 Jun 08so dupshar, how much should associates who have just joined after an mba or msc with some experience expect in s&t? Add your comment »Dupshar = muppet, Derivatives, Sun 29 Jun 08by how to play your cards you probably mean threatening them with sexual/racial harassment?
patel, Hedge Funds, Sun 29 Jun 08dupshar, your remark regarding IBD stinks of your ignorance. as a first year trader you wouldnt be doing anything fantastic and wont know much either. probably calling up the banks' stupid clients and try to convince them that you are not as retared as you sound and get them to make unnecessary trades. you wont be afforded a large balance sheet to play with and your 'master' will be watching you like a hawk ready to crack his whip as the first sign of trouble.
Dupshar Patel, FX & Money Markets, Mon 30 Jun 08What a retarded comment "Patel". You claim I'm ignorant and then give a load of assumptions based on no personal experience on trading? I've been there, done that, and as a 1st year trader most certainly did not do the rubbish work you outlined. I had my own book. I was making serious P&L on prop and agency. A young age and lack of inexperience is irrelevant if you're at a meritocratic firm where you can prove you have good ideas and quickly gain a track record you're sorted. Unlike IBD, where however good you are, analyst gimp work is analyst gimp work. Add your comment » |
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