London investment bankers are expected to receive larger bonuses this financial year, following a recovery in dealmaking activities after a two-year downturn caused by rising interest rates.
The end of the rate hike cycle and increased capital markets activity are likely to boost bonuses in the spring. Despite previous pay cuts, especially among mid- and senior-level bankers, the outlook for 2024 is improving, with significant potential for higher compensation compared to recent years.
1. Bonus Increases Expected
London investment bankers are set to receive bigger bonuses this year due to a rise in dealmaking activities.
2. Interest Rate Impact
Demand for investment banking services fell due to higher borrowing rates post-pandemic, leading to job and pay cuts.
3. Rate Hike Cycle Ending
The UK and US are expected to lower borrowing costs before Christmas, contributing to increased dealmaking.
4. Spring Bonus Season
Increased activity in capital markets will likely be reflected in bonuses during the spring bonus season.
5. Recruiter Insights
Dartmouth Partners’ survey indicates an improving outlook for 2024, though bonuses may not reach 2021-22 levels.
6. Bonus Cap Scrapped
The UK’s removal of the banker bonus cap could lead to larger bonuses and more variable compensation over time.
7. Compensation Trends
Last year saw significant pay cuts for many bankers, with some vice-presidents experiencing a drop of up to 26.8% in total compensation.
8. Job Cuts
Over 600,000 global banking jobs were cut in 2023, the highest since the 2007-08 financial crisis.
9. Shift to US Firms
Many London-based bankers at European firms are considering moving to American banks for higher compensation.
10. Positive Outlook
Despite recent challenges, many bankers remain optimistic about improved compensation and job security in the coming year.
