US investment banks are leaving all others behind when it comes to offering high salaries to graduates. But do their pay structures remain as competitive once they have people on the hook?
The answer depends on whether you prefer the security of high base pay or the lure of a potentially gargantuan bonus.
A UK graduate joining an American investment bank this autumn will be earning nearly 40,000 in their first year, probably a bit more than their counterparts in European houses.
They will also encounter a very different training routine - usually a stint in the USA to meet colleagues and get indoctrinated in the culture, followed by hard graft and punishing hours back in London or elsewhere in Europe.
The culture difference between the two never gets eroded, but the gap in basic salaries does. In fact it soon goes into reverse.
In a US bank base pay will rarely go above 100,000, even for analysts and salesmen with years of experience and excellent track records. US banks are driven by a bonus culture, with performance-related pay making up the bulk of front office salaries and often running to several hundred percent of base pay.
The European banks, meanwhile, are controlled by boards of directors, composed largely of commercial bankers. Paying out large bonuses is anathema to them and their shareholders, despite their constant claims to be committed to investment banking.
The result is that basic salaries in European banks can be much higher than in their US counterparts, with sums in excess of 200,000 for producers without much real management responsibility.
The Americans are also masters of the share option arrangement, with large payments in shares and forward vesting dates a substantial discouragement to job mobility. Bonuses can be huge, but are never guaranteed, unless joiners are tough negotiators and secure a multi-year deal.
The moral of this story is that if you are a successful producer, and can get by on a relatively modest monthly salary, the US banks are the place to work. The medical benefits too are second to none, arising from the US reliance on private healthcare.
That's no bad thing though, considering the hours and stamina needed to work in most US banks.
Case history - salaries:
1985 US bank graduate trainee, starting salary 19,500
1992 left, final salary 35,000, bonus 50,000
1992 Joined European bank debt syndicate, starting salary 50,000, first year bonus 60,000
1998 left, final salary 120,000, final full year bonus 100,000
1998 Joined US bank, starting salary 80,000, first year bonus 250,000.