Investment banking: what’s the deal?

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Investment banking has long been the ‘go to’ employer for a very specific cohort of students and graduates. It’s the marmite of the employment world – you either love the idea of working in the City or you can’t stand the thought of selling out to the god of mammon.

I exaggerate, of course. But money has always been a deciding (albeit unspoken) factor in whether you chose a career in investment banking. Big rewards do attract some incredible talent. That, however, may be about to change.

Investment banks are downsizing in most quarters; but more worrying overall is that the deal for IB employees is changing. Only the very top few per cent can expect the big bonuses today. The rest will now have to be content with something more modest, and sometimes nothing at all.

Now, you can say, ‘but aren’t basic salaries rising to compensate?’, ‘aren’t the average salaries of investment bankers still so much more than anywhere else?’ and ‘surely you can still attract great people even if you don’t offer such obscene amounts of money?’.

Yes, you can. To a point. The truth is that it’s only going to become more difficult to get the very best people – and just as difficult to keep hold of them.

Because there’s no longer any guarantee of top rewards. You still have to work incredible hours. You could lose your job in a moment. And even if you do keep it, what about the social stigma of being an investment banker?!

Only recently, one HR professional in one of the larger investment banks recounted how a senior banker had stated that he was taking his kids out of private school – and the reverberations that this had caused within the bank.

Some investment banks are starting to address the issues –or at least to open the debate. But this is only possible if the leadership and senior managers really understand the implications of what is happening.

And they are happy to buy into the new deal as well…

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