Investment Banks Pay Fresh Graduates More due to Scandals
Investment banks in London have been forced to offer more competitive salaries to attract this year's top graduates who industry players say have been deterred by the recent banking scandals.
In an attempt to lure fresh graduates, top investment banks in London are reportedly boosting starting salaries by approximately 5 percent - on top of the 20 percent premium the banking industry pays its new graduate hires.
New recruits can expect to earn between £45,000 to £50,000 ($71,000 to $79,000) a year at top investment banks.
According to Jon Terry, partner at PricewaterhouseCoopers, who advises top banks on pay schemes, the increase is a reflection of the reputational issues surrounding the industry, as well as the social stigma associated with working for a bank.
He told the Telegraph:
There is no doubt that 'banker bashing' and the scandals at the banks are impacting graduate decisions about going into the City. The importance of reputation seems to have gone up tremendously ... Money isn't the only part of the equation for grads - they don't want to go to a party and say they work for a bank.
However, Terry said that the "reputational damage" appears to have affected only investment banks, not banking at large.
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In June, Barclays agreed to pay $457 million in settlement with US and UK regulators over allegations of rigging the London Inter Bank Offered Rate, or LIBOR. At the same time, the scandal and public scrutiny led to the departure of chief executive Bob Diamond, who might face criminal prosecution for his involvement in the scandal.
HSBC and Standard Chartered, which both avoided the worst pitfalls of the financial crisis, have in recent weeks made multi-million-dollar settlements with American legislators over money-laundering scandals.
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