Graduating college seniors will now start at Goldman Sachs at $85,000 plus bonus (WSJ)
Wall Street Banks Lift Pay for Junior Bankers
By Sara Jerving and Justin Baer
August 20, 2014 10:19 PM
Wall Street banks, under pressure to improve working conditions for junior employees, are raising salaries.
A host of big banks including Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Citigroup Inc., Bank of America Corp. and Morgan Stanley have decided to raise pay or are seriously considering the move for many junior bankers. The pay hikes, which are generally coming in the form of salaries as opposed to year-end bonuses, could hit 20%-25% at some firms.
Goldman Sachs will increase starting salaries for many first-year analysts by about 20%, according to a person familiar with the bank’s plans. The pay raise, slated to go into effect next year, will apply only to analysts in the U.S., the person added.
The move comes as Wall Street continues to bounce back from a financial crisis that put it in the crosshairs for the lavish bonuses. Politicians and regulators argued the industry’s pay policies pushed employees from the CEO on down to take risks that left the financial markets on the brink of collapse. Big banks responded by moving to lower yearend cash bonuses, while paying a bigger slice in company stock and boosting salaries, viewed as a more stabilizing means of pay.
For the junior employees, Goldman Sachs made the decision in order to remain competitive among graduating college seniors, who will likely be faced with other offers in finance, according to a person familiar with the decision. Junior analysts will now make about $85,000, not including bonuses, up from about $70,000, the person said.
In recent years, Wall Street firms have faced pressure to pay their junior employees more, while cutting back on their hours, as recruiting has suffered from the reputational damage of the financial crisis, the long hours of working at an investment bank and a challenging revenue environment for the industry.
Last year, discussions about working conditions on Wall Street came to the fore after a 21-year-old Bank of America Merrill Lynch intern in London died of an epileptic seizure that an inquest found could possibly have been brought on by the long hours he was working.
Goldman’s pay raise, which will likely include first-year and second-year analysts, comes along with other efforts to improve incentives for junior bankers. Last fall, Goldman added a protected weekend for investment-banking analysts in which they aren’t allowed to work from Friday evening to Sunday morning.
Bank of America is boosting the pay of its junior investment-banking and trading employees by at least 20% next year, a person familiar with the matter said. The bank included the higher salaries in the offers it made this month to summer interns who were invited to return as full-time employees in 2015, the person said.
J.P. Morgan may raise some employee salaries by at least 20 percent as well, a person familiar with the matter said Wednesday. Internal discussions are continuing on the subject, though a pay raise for some is likely since rivals have raised pay to try to make their offers more attractive.
Citigroup is also considering a pay increase for analysts and associates, a person familiar with the bank said.
Last month, Morgan Stanley told junior bankers and junior workers on its capital-markets desks it will raise their base salaries by as much as 25%. The Morgan Stanley move, which affects associates and vice presidents in the bank’s global markets and investment-banking divisions, won’t affect bonuses, which are determined separately around year-end and could fall even as salaries move higher, said a person familiar with the matter.
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