Barclays has slashed youth bonuses this year in a sign that a collapse in the deal will hit bankers’ pay.
The U.K. lender released bonus numbers for its analysts this week and has cut variable compensation, according to negotiators and headhunters.
Analyst bonuses at most investment banks are paid over the summer, with the highest paid between January and March.
Average payments for first-year analysts at Barclays equaled about 40% of base salaries, or $45,000, while second-year analysts received 65%, or about $80,000, according to people familiar with the matter . Bonuses are higher for top performing bankers.
The figures are based on revised salaries for Barclays juniors, who received two increases in base pay in the past year. First-year analysts at the bank now receive $110,000 in salary, while second-year analysts receive $125,000.
Last year, first-year juniors at Barclays received 85% of their salary as a bonus, according to figures from recruiter Dartmouth Partners, a figure that rose to 100% for second-years. These payments amounted to $72,000 and $105,000 respectively based on current salaries.
Barclays analysts contacted by Financial News were disappointed with this year’s payouts, after expecting higher figures.
Barclays has been contacted for comment.
Junior bankers’ salaries have soared over the past year, and negotiators had speculated that higher basic pay would affect how much banks pay out in bonuses this year.
TO READ Goldman Sachs boosts analysts’ bonuses after juniors complain of brutal hours
Barclays raised entry-level investment banking salaries in the US from $85,000 to $100,000 in June last year, with equivalent increases elsewhere in the world, but revised the pay again at the beginning of ‘this year at $110,000 to keep pace with rivals.
Bonuses for analysts rose 60% on average last year, according to Dartmouth Partners numbers, with Goldman Sachs leading the pack by paying 130% of base salary. But Barclays numbers suggest analyst bonuses are now being reduced to more normal levels.
Banks took in $130 billion in fees last year, a record for the industry, as revenue rose from mergers and acquisitions, capital markets and leveraged finance. So far this year, equity fees have collapsed as companies have struggled to price IPOs in a volatile market and financing for big deals has become increasingly difficult.
The banks’ second-quarter earnings, which will be released from July 14, are expected to show a sharp decline in trading fees.
Demand for junior bankers remains high as some banks continue to lose talent to rivals, private equity firms and other industries.
Despite a 30-40% rise in wages over the past year as banks have struggled to stem the exodus of analysts, core pay rises are still coming through. Credit Suisse, Nomura and Rothschild have been the latest to increase pay.
To contact the author of this story with comments or news, please email Paul Clarke