- Morgan Stanley lifted London investment-banker bonuses about 10–15% year over year, with top performers getting more.
- The bigger bonus pool tracks stronger results, including roughly 15% EMEA revenue growth to $6.4B in the first nine months of 2025 and 15–20% bonus gains in Asia.
- Junior bankers say bonus-to-salary levels still lag rivals, with analysts around 15–30%, associates 30–60%, and VPs 40–60% of base.
- The UK’s removal of the EU bonus cap is enabling larger variable pay, especially for senior dealmakers in strong units like M&A and equity underwriting.
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The recent upward adjustment in compensation at Morgan Stanley reflects both improved financial performance and a competitive labor market in investment banking. The bank’s EMEA revenue growth of ~15% through the first nine months of 2025 provides underlying justification for boosting bonus pools. Meanwhile, Asia operations appear to have outperformed; bonus increases in that region of 15–20% suggest regional variation in reward aligned with market momentum.
However, while bonuses have increased generally, junior London bankers express dissatisfaction. Their bonus proportions (15–30% of base for analysts, 30–60% for associates, 40–60% for vice presidents) are noticeably lower than what is being offered by rivals in top-tier banks—where associate bonuses historically could reach 50–100%, and VPs 100–120% of base. This raises potential risks for morale, retention, and recruitment among mid-tier talent, especially as competitors leverage these levers to attract personnel.
Regulatory changes have materially shifted the compensation landscape. With the UK abolishing the EU bonus cap for “material risk takers,” banks have greater flexibility to link pay to performance for senior staff. Morgan Stanley and other institutions are using this flexibility to offer substantially larger variable compensation for dealmakers and top performers. Still, the gap between base and variable pay is widening, which could increase fixed-cost risk and incentivize short-term decision-making if not managed carefully.
Strategic implications include:
- Banks may increasingly compete for top talent by amplifying bonuses rather than raising base salaries—this could exacerbate cost volatility for institutions during market downturns.
- Junior and mid-level bankers might feel undercompensated relative to peers, potentially increasing turnover or prompting shifts toward banks with more generous variable compensation.
- Management must balance incentivizing performance with risk control and long-term alignment, especially given increased regulatory scrutiny on pay structures and risk-taking behavior.
- In continental Europe, where regulatory status and revenue growth may lag, bonus growth may be more moderate and uneven.
Open questions:
- How will Morgan Stanley and rivals calibrate base vs. variable compensation over the next year—will fixed pay stagnate or decline?
- Will the gap in bonus generosity between top performers and others widen materially, and how will that impact internal equity?
- Could macroeconomic or regulatory shocks (e.g., interest rates, credit stress, governance reforms) undercut the expectations of continued bonus growth?
- How sustainable are large bonus increases given profit margins, capital requirements, and risk-weighted assets in volatile environments?
Supporting Notes
- Morgan Stanley hiked bonuses for London dealmakers by 10–15% over the prior year; higher performers got more on top.
- EMEA revenue at Morgan Stanley rose ~15%, achieving $6.4 billion in the first nine months of 2025; Asia bonuses rose 15–20%.
- Junior bankers report analyst bonuses of ~15–30% of salary; associate bonuses ~30–60%; VP bonuses ~40–60%.
- Comparative data: two years ago, associate bonuses across London banks ranged from 50–100% of base; VP bonuses from 45–120%.
- Morgan Stanley removed the EU-imposed bonus cap (limit on bonuses of certain senior bankers to twice fixed pay), replacing it with an “appropriate internal bonus cap”.
- Front-office divisions like equity underwriting and M&A are leading the bonus gains.