INVESTIGATION –  Salaries can easily exceed €100,000 at the start of a career. These staggering sums mask an equally extraordinary reality.

Seventy-five-hour weeks. Angela knows those years of intense work all too well. This young investment banker, a 2020 graduate of the prestigious ESSEC business school, who completed a several-month internship in the mergers and acquisitions department at Lazard two years ago, has no regrets. In a sector where career advancement and salaries remain very attractive, the 25-year-old made her decision fully aware of the implications. " I knew I had to work very hard. When I left at midnight, it was relatively early. I wouldn't change my career for anything, though. I learned a lot. When you close a deal, it's very satisfying ," she explains . In the secretive world of M&A (Mergers and Acquisitions), where Anglicisms reign supreme, "closing a deal" means finalizing a merger or acquisition between two companies.

These hours seem crazy, and the salaries reflect this excess. Upon graduating, after a six-month internship at Lazard, Angela was offered a salary of €70,000 ("70K" in industry jargon) with a bonus of 80 to 100% of her compensation. However, she decided to join the financial analysis department of a bank based in London. "  The M&A department remains isolated from other departments, very confidential. The department I currently work in is completely different. There's less hierarchy, we work more as a team. The hours are also more flexible. I start very early, around 6:30 a.m., and finish between 5:30 p.m. and 7:00 p.m., depending on the projects and deadlines ," explains the young investment banker, who earns an annual salary of €75,000 excluding bonuses (the latter remaining confidential).

Around 100,000 euros gross

Financial Times ranking published in June 2021, a young investment banker with a master's degree in finance from ESSEC, a top business school, can expect to earn a salary of $120,000 (the equivalent of €107,000 gross per year). Upon graduating from EDHEC, which is also among the top five schools in the ranking, " an investment banker earns between €60,000 and €120,000, including bonuses ," notes Laurent Deville, professor of finance at EDHEC and academic director of the master's programs in finance.

Salaries vary depending on the department and the institution. “ An analyst—who helps businesses and companies make investment decisions—earns around €65,000 at a French bank, not including a bonus that can range from €35,000 to €50,000 and is contingent on the bank's performance. The highest-paying banks in France are Lazard and Rothschild & Co, followed by BNP Paribas and Société Générale ,” a headhunter reveals. This salary rises to €120,000 excluding bonuses in their second year. VPs (vice presidents), the next level up, earn €150,000 with a 75% bonus at a French bank. These packages can be significantly higher if you work at a foreign institution. An M&A analyst at Goldman Sachs, for example, does not earn the same as an M&A analyst at a French bank. “ American banks in France offer higher base salaries, about 20% more. The real difference lies in the bonuses, which are over €100,000 ,” observes Christophe Laville , principal at Vauban Executive Search , a recruitment firm specializing in managers and executives. “ One of our graduates from three years ago, working for an American bank in Dubai, now earns $400,000 a year. That’s enormous ,” reports Laurent Deville.

Strong activity in mergers and acquisitions

Why are salaries so high? The explosion of M&A activity worldwide partly explains the astronomical salaries even at entry-level positions. Banks need to staff up to support opportunities and advise companies. " Investment banking activity has been phenomenal over the last two years. There are a lot of acquisitions and deals ," reports François Longin, a finance professor at ESSEC Business School for 25 years. The larger and more numerous these deals are, the larger the variable component for the teams. Variable compensation is a significant factor, as it generally represents 20% to 100% of the fixed salary. " What infuriates bank executives and makes them anxious is missing out on deals due to a lack of staff. The need for skilled personnel is significant in the luxury goods, retail, and telecom/media sectors. Specialization comes at a price, " explains Christophe Laville . Junior bankers are experts in financial modeling, Excel spreadsheets, and PowerPoint—a format used to present banks' ideas and insights to their clients. "An M&A analyst produces numerous financial projections within fairly short timeframes, which explains the long hours. The deal can't wait," adds the headhunter.

An increasing number of players

The market is also dominated by strong competition. Paris is becoming a hub for investment banking in Europe. The number of investment bank staff in Paris has more than doubled in recent years. Foreign institutions, particularly Anglo-Saxon ones (Morgan Stanley, JP Morgan), are driving salaries up. It is therefore essential for French investment banks to keep a close eye on the competition to remain at the top. The creation of boutiques specializing in small (transactions under €50 million) and mid-cap (between €50 million and €500 million) companies, such as Eurallia Finance and Cambon Partners, smaller, independent M&A advisory firms, is also attracting talent. The main advantages of these boutiques? Independence and flexibility. " The big French banks are making mega-deals with CAC 40 companies, neglecting smaller businesses." Accounting firms and Big 4 firms (Deloitte, EY, etc.) have established themselves in the M&A segment of small and mid-cap companies, which tends to drive the market. There is demand everywhere,” analyzes Christophe Laville.

We must also consider the competition from private equity (investments in unlisted companies), where salaries are soaring, reaching around €100,000. Unlike investment banks, teams working in investment funds follow a company's progress over the long term. They travel to the companies' sites. Their daily work is much more hands-on, giving their jobs much more meaning. " Being an investor seems much more glamorous than working in a suit and tie at a bank ," observes Christophe Laville.

A difficult work-life balance

Added to all this is a shortage of candidates.  “Banks are able to increase salaries to attract talent, not to mention the rather substantial bonuses, which are on the rise in 2021, ” says Hélène Frasca, Associate Director at the recruitment firm Walters People. To counter this talent shortage, banks are approaching top universities directly. “ There’s an attempt to attract the best candidates very early in the program ,” explains Laurent Deville. “Most Master’s students graduating in June already know the position they’ll be taking on in December .” François Longin, a finance professor at ESSEC Business School, is also receiving a flood of offers. “ There are more and more proposals, particularly from the mergers and acquisitions departments of investment banks ,” the professor notes.

The tension in the markets is also explained by a paradigm shift and new expectations from candidates. “ More and more students are looking for high salaries and a sense of purpose. They are deciding to leave banks to join startups and fintechs ,” observes Laurent Deville. The latter offer equity packages that can become more attractive, much more appealing than a bank, if the company grows. The question of work-life balance arose for Nicolas*, a 2021 graduate of a top business school. He is about to join the Coverage department of a French bank—the sales department that orchestrates client relationships—and leave behind M&A, where constant availability is often cited as the worst aspect of the job. “ I did internships in more sheltered sales departments.” "I have worked weekends, had longer hours, finishing at 9pm or even 10pm during the health crisis, but it has nothing to do with the M&A teams who regularly have dinner at the office at 8pm and finish their day at nightfall ," says Nicolas, who will receive a salary of 50K, excluding bonuses.

High salaries, therefore, don't justify everything. Young people no longer want to give up their private lives . "  Candidates are also no longer willing to commute long distances since the health crisis. One of our clients based in the Yvelines region had to increase their compensation to satisfy candidates ," reports Hélène Frasca. To support this quest for work-life balance, more essential than ever for new generations, and to retain talent, banks will be forced to redouble their efforts and no longer simply offer exorbitant salaries.

*Names have been changed.

Mallory Lalanne , freelance journalist at Les Echos, Le Figaro
https://www.lefigaro.fr/societes/horaires-salaires-concurrence-l-univers-demesure-des-jeunes-banquiers-d-affaires-20220428