City Expects Exceptional Bonus Season

Highlights
93% of Londonís financial services workers expect their 2006/2007 bonus payment to be higher/comparable to last year

A quarter (24%) expect their bonus to be over 100% higher than last year

A further 28% expect their bonus to be up to 50% higher than last year

Only 25% would stay with their current employer if their bonus did not match expectations

Bonus payments will be used to retain top talent as the gap between jobs and candidates reaches a differential of 20% leading to further intensification of the ëwar for talentí

New jobs increased 7% on July and 19% over the last quarter

Candidate numbers increased 4% over the last quarter

Average basic salaries stayed above 50,000 for the sixth consecutive month

Bonus expectations soar
As the summer season comes to a close, thoughts amongst City workers have once again turned to the next bonus round. Of the individuals polled working in investment banks and financial services institutions in the City of London, the vast majority (93%) expect their bonus to be higher than in 2005/2006. A quarter (24%) are expecting their payment to be more than 100% higher and a further 28% are predicting up to a 50% rise.

While nearly half (47%) were ëdisappointedí with the bonus they received last year, this does not seem to have had an impact on expectation levels for this year. Only a quarter (24%) stated that they would stay with their current employer if their bonus payment did not meet their expectations.

Robert Thesiger, Chief Executive of Morgan McKinley, comments:

ì2006 has been another good year for the City and most employees will now expect to see the rise in corporate profits reflected in their bonus payments. More than ever this season, banks will be using bonuses as a key retention and attraction tool, heavily compensating internal talent, while sending a clear message to potential employees of the level of reward available within their organisation.

ìOnce again banks will have to carefully manage the bonus expectations of their staff to ensure they remain realistic about potential payouts. Nevertheless, the end of the season always encourages movement in the market and so we would expect to see increased candidate fluidity during the first quarter of 2007.î

City Confidence
High bonus expectations, continued strong levels of hiring activity over the summer period (a rise of 19% in new jobs compared to the previous quarter) and the average City salary remaining above 50,000 for the sixth consecutive month, is clear evidence of current confidence in the City. However, with 20% fewer candidates coming on to the market than new jobs, the gap between demand and supply continues and there is no sign of the ëwar for talentí abating.

Robert Thesiger, Chief Executive of Morgan McKinley, comments:

ìThe City recruitment market is extremely strong at present with the number of new jobs increasing in line with the expansion and diversification of London and the global financial services industry. Talented City professionals are in high demand as the gap between new vacancies and candidate availability continues to widen disproportionately. This is a trend we expect to hold true for the foreseeable future.î