UK M&A dealmaking saw a slowdown in H1 2025, with Experian data showing deal volumes down 16% year-over-year, as rising tariffs, sector pressures, and regulatory uncertainty weighed on activity. While SME deals helped drive a modest Q2 rebound, overall market momentum has softened.
So how has this slower deal environment impacted investment banking salaries? Early indications suggest turbulence: pay gaps between top-tier and smaller firms are widening, gender disparities persist, and uneven bonuses are contributing to tension within the sector.
Here’s a detailed look at how pay is shaping up across UK investment banks in 2025.
Top-tier firms pay a premium
Data from Goodman Masson reveals a growing gap between elite institutions and smaller rivals.
Pay differences increase with seniority; entry-level roles start on similar amounts, but top-tier firms boost earnings much faster with each promotion.
The contrast is most visible at the top, where directors at leading banks can earn up to £50k more than their mid-tier counterparts.
| Title | Tier 1 Compensation (GBP) | 2nd & 3rd Tier (GBP) |
|---|---|---|
| Analyst | £50k–£80k | £50k–£60k |
| Associate | £80k–£135k | £60k–£85k |
| Vice President | £120k–£165k | £85k–£125k |
| Director | £150k–£210k | £125k–£160k |
Within investment banks, there is strong demand for finance specialists in areas such as regulatory compliance, financial analysis, and performance reporting.
While post-qualification (PQ) starting pay is competitive, these roles outpace many support functions, with seasoned professionals regularly surpassing the £100k threshold.
| Role | 1–2 years PQ (GBP) | 2–5 years PQ (GBP) | 5–8 years PQ (GBP) | 8+ years PQ (GBP) |
|---|---|---|---|---|
| Management Reporting | £65k–£75k | £70k–£100k | £90k–£120k | £100k+ |
| Regulatory Accounting | £65k–£80k | £75k–£110k | £90k–£130k | £100k+ |
| Financial Analysis | £65k–£80k | £75k–£110k | £90k–£130k | £100k+ |
Gender inequality persists
Beneath the headline numbers, gender pay gaps remain deeply entrenched in investment banks.
Government data shows Goldman Sachs and JPMorgan are among the UK’s worst performers for gender pay equity:
- Goldman Sachs: Women earn 50% of male salaries, with bonuses just over a third of men’s. Only 25% of women occupy the top-earning quartile.
- JPMorgan: Women receive 39p in bonuses for every £1 awarded to men, with just 16.6% in the top quartile.
- Bank of America and Morgan Stanley: Salaries are closer to parity (86% and 83%), but bonuses are still around two-thirds of male averages.
- Rothschild: Women make up just over 30% of its top-earning band, reflecting moderate representation at the senior level.
Despite banks’ representation pledges, progress is slow. And in a sector where bonuses can dwarf salaries, even modest disparities quickly compound.
With growing pressure to improve diversity amid concerns over pay inequality, an ‘alpha male’ culture, and biases against working mothers, these issues pose serious ethical and reputational risks. If left unaddressed, they could also undermine firms’ ability to attract and retain top talent.
Discontent at Morgan Stanley
Morgan Stanley has reaffirmed its UK commitment, extending its Canary Wharf lease through 2038. Yet eFinancialCareers reports that employee engagement is starting to fray, driven by frustration over bonuses.
Bonus ranges by level:
- Analysts 15-30% of base
- Associates 30-60% of base
- VPs 40-60% of base
These remain well below pre-2022 levels, continuing the subdued trend seen in 2024.
One Morgan Stanley insider summed up the mood bluntly: “I am surprised and disappointed. Working hard doesn’t seem worth the effort any more.”
While investment banking pay still outstrips most industries, context matters. Morgan Stanley’s junior bankers are averaging 78-hour work weeks, the longest among major firms. In that light, the grumbling is easier to understand.
Recruiters note that the bank offers higher base salaries than its competitors, with first-year VPs earning around £185k compared with £150k elsewhere. However, bonuses at this level can double total compensation, making the extra £35k base less significant.
The bonus cap is gone, but rewards are uneven
With the EU bonus cap lifted, UK banks have adopted sharply different strategies.
Barclays and HSBC have gone on the offensive, increasing potential payouts to as much as 10 times base salary — levels not seen since before the 2008 financial crisis.
Lloyds has set a slightly lower ceiling at eight times salary, while NatWest remains cautious, nudging its limit up from 1x to 2x base pay.
| Bank | Previous Cap | New Cap | Multiple vs. UK Avg. | Scope |
|---|---|---|---|---|
| Barclays | 2x | Up to 10x | Above | All senior and eligible staff |
| HSBC | 2x | Up to 10x | Above | All senior and eligible staff |
| Lloyds | 2x | Up to 8x | In line | Primarily Material Risk Takers (MRTs) |
| NatWest | 1x | Up to 2x | Well below | All senior & eligible staff |
For senior bankers designated “Material Risk Takers” (MRTs) — those whose decisions could affect a bank’s risk profile — at least 40% of bonuses must be deferred, rising to 60% for exceptionally large awards. Vesting typically runs three to five years, tying a substantial portion of pay to sustained performance.
UK rules also enforce clawback and malus provisions, allowing banks and regulators to withhold or reclaim past bonuses for up to a decade if misconduct or risk-management failures emerge.
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