Fear is in the air as junior bankers face annual reviews
It's that time of year. At banks which pay bonuses to their investment banking analysts in August, annual reviews for junior bankers take place in the coming month. This year, there is a more than usual amount of apprehension about their outcome.
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Year-to-date, Dealogic says global investment banking revenues are down 3% on 2024. In Europe, however, they are down 12%. European equity capital markets revenues are down 20%. Deutsche Bank is cautioning that its investment banking revenues will be flat globally for the second quarter. Bank of America is predicting a fall of 25%.
More than ever, therefore, this year's reviews matter. A bad review is likely to lead to a bad bonus, or worse. A new set of analyst recruits arrives in July, and juniors at some bankers say teams are already bigger than expected because fewer people have left for private equity. "Private equity recruiting has slowed right down, so banks will be considering letting juniors go," suggests one analyst at a European bank in London.
Unwanted juniors will float into a crowded market. HSBC's unwanted analysts and associates are lurking there. Barclays has been cutting. So has Goldman Sachs. Insiders say Deutsche Bank made quiet cuts to its top-heavy investment banking team in April, and that DB juniors were included in those. Deutsche Bank isn't commenting.
The coming reviews work differently at each bank. "We usually submit a list of 10 people internally who will review us," says one Deutsche Bank junior. "Five have to come from outside our team. We're then given reviews between A-D. Only 15% get the top ratings."
At Citi, a new ratings system was imposed last year, with managers instructed that only 10-15% of their reports can be rated "exemplary" and that only a further 15%-30% can be rated "exceeds expectations." One junior at Citi says most people at the bank are rated 3-3 or "average", with only 35% of people above this.
"Citi won't let go of you if you're in the top 35%," he says. In the 65% below layoffs are at managers' discretion. However, he also claims that many junior bankers at Citi would actually quite like to be asked to leave. "There have been loads of layoffs in the past two years and people are overworked," he says. "We know bonuses won't be good and if you're laid off you will at least get severance pay."
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