Wall Street Bankers’ Bonuses Leapfrog City in ‘Less Impressive’ Year

Why It Matters

The shift underscores a growing compensation advantage for U.S. banks and buy‑side firms, pressuring European banks to reassess pay structures and talent retention strategies.

Key Takeaways

• US bankers' average bonus hit $154k, 5.9% YoY rise.
• London bankers' bonus grew 3.5% to $154k, lagging expectations.
• Buy‑side compensation rose 7.5%, outpacing lenders.
• UK lifted EU bonus cap, enabling higher senior payouts.
• Surveyed bankers expected 50% bonus jump, reality far lower.

Pulse Analysis

Record profitability in 2025 gave U.S. banks a solid footing to increase compensation, yet the actual bonus uplift was modest compared with the bullish expectations that circulated among banking professionals. The average Wall Street bonus of $154,344 reflects a 5.85% rise, comfortably above the City’s 3.5% increase, but still far from the 50% surge many had forecast. This gap between expectation and reality highlights a cautious tone among bankers, even as the sector enjoys a $300 billion profit pool across 4,300 U.S. institutions.

Regulatory divergence is amplifying the compensation split between the U.S. and Europe. Britain’s decision to scrap the EU‑mandated bonus cap—limiting payouts to 100% of salary or 200% with shareholder approval—has unlocked higher earnings for senior staff, with some bonuses now exceeding $1.15 million. Meanwhile, EU members remain bound by the cap, creating a competitive disadvantage that could spur talent migration toward London or New York. The UK’s recent rule change allowing part‑payment of bonuses from the first year further accelerates cash flow to top performers, reinforcing Britain’s appeal as a banking hub.

Buy‑side firms are capitalising on strong market performance, posting the steepest bonus growth at 7.5% and managing a record $5 trillion in assets under management. Their higher payouts reflect robust returns—averaging 12.5%—and signal that talent will be drawn not only to traditional lenders but also to hedge funds and private equity firms. As compensation trends evolve, banks on both sides of the Atlantic must balance profitability, regulatory constraints, and talent retention to stay competitive in a market where bonus expectations are increasingly tempered by reality.