The City enters bonus season with a familiar but increasingly structural divide: traders are powering ahead while dealmakers remain stuck in a low‑growth cycle. What once looked like a temporary distortion caused by the post‑pandemic rebound now appears to be hardening into a more durable feature of global investment banking.
At the centre of this shift is the outperformance of equities trading, which has benefited from a year of persistent volatility, strong derivatives activity and renewed client engagement. Banks are preparing to lift payouts for equities teams by 15–25 per cent, marking one of the strongest years for the asset class since 2021. For many institutions, equities has become the most reliable engine of revenue growth — a role traditionally played by advisory franchises during periods of buoyant corporate activity.
Advisory teams, by contrast, continue to face a subdued environment. M&A volumes have stabilised but remain well below their pre‑2022 peaks, while equity and debt capital markets have yet to deliver a convincing recovery. The result is a bonus season that looks flat at best for corporate‑finance bankers. Several banks are quietly diverting part of their trading windfall to support advisory pay, a move that underscores both the strategic importance of retaining senior dealmakers and the extent of the performance gap.
This divergence is not confined to London. New York continues to outpay the City across most seniority levels, reflecting the scale of the US market and the dominance of American institutions. Yet London is experiencing a sharper rebound in equities compensation, driven by strong European client flow and intensifying competition from hedge funds and proprietary‑trading firms. In advisory, both markets face similar headwinds, though US dealmakers are expected to fare marginally better thanks to a more active domestic M&A pipeline.
The winners and losers across desks reflect broader macro dynamics. Equities trading is the standout performer, while macro and rates desks have enjoyed a steadier, if less dramatic, year as central‑bank policy shifts created opportunities but not the explosive gains seen in equities. On the losing side, M&A, ECM and DCM teams remain constrained by weak issuance and cautious corporate sentiment. Sector teams tied to slower‑moving industries — industrials, consumer, parts of real estate — face particularly tight bonus pools.
Beneath the headline numbers lies a deeper shift in how banks allocate capital and reward talent. Base salaries have barely moved, but bonuses — the variable component — have become more sensitive to market conditions and internal performance. Trading divisions, with their clearer P&L attribution and faster revenue cycles, are increasingly favoured in this environment. Advisory, with its longer deal timelines and greater dependence on macro confidence, is struggling to keep pace.
The question for the industry is whether this divergence proves cyclical or structural. A sustained recovery in corporate activity could narrow the gap. But for now, the City’s compensation landscape reflects a broader truth: in a world defined by volatility, the traders are winning.