Bonuses Are Back for Bankers, But Spending Habits Have Changed

In the latest season of the BBC banking drama Industry, the central character, Harper Stern, embodies a cutthroat mentality that reflects the reality of the financial world. She bluntly states, “Do you want to know who is actually loyal? See who is loyal when the number is zero.”

For many investors, the only thing that counts on bonus day is the numbers. Sure, they have a hefty base salary, but it’s the bonuses that really make a difference. Typically, bonus season spans from December to March, and this year, many banks are dishing out their biggest bonuses in over ten years.

Back in 2022, then-Prime Minister Kwasi Kwarteng introduced a plan to eliminate limits on bankers’ bonuses during his “mini-budget,” aimed at enhancing competitiveness post-Brexit. That change materialized about a year later.

The 100% cap on base salaries was initially set in 2014 under EU regulations to mitigate excessive risk, but its repeal was one of the few measures from the mini-budget that survived the government’s revisions. Moreover, some restrictions were relaxed in late 2025, allowing senior bankers to access their fees earlier.

With these restrictions lifted, the cap is effectively a thing of the past. Average earnings at Citi have already hit £100,000, while at Goldman Sachs, some London-based employees are reportedly making 25 times their fixed salary. This trend is occurring globally; last week, HSBC revealed bonuses reaching $3.93 billion (£3.1 billion), marking a 14-year high and a 10% rise from the previous year.

A vice president at a European investment bank shared with the Sunday Times that his latest bonus was £260,000, building on his base salary of £140,000. He mentioned that his bonus was in the top tier for his position. “There’s a lot to handle in a day. And my job was good compared to my colleagues,” he remarked.

His plans for the bonus? Financing his engagement and covering a relative’s college tuition, while saving and investing the remainder for future family needs. “At the end of the day, it’s just money. Recognition is more important,” he added.

Bonuses are usually determined by both company-wide and department-specific budgets. The vice president noted that while banks typically don’t disclose their compensation calculations, European bankers can earn up to 7% of their annual profit or loss, whereas their U.S. counterparts get around 4%.

In U.S. banks, the buzz around bonus announcement days—often dubbed comp days—has become quite lively. One banker amusingly compared it to “school speech day.” He described how everyone is required to dress sharply, with suits and ties for men creating an air of ceremony that feels quite traditional. Some even play a chosen “going out song” for those who are promoted—one year, a Taylor Swift track was the anthem.

“Today is one of the biggest days in people’s careers,” he explained. For many, promotions are limited; starting as an analyst, one has only a few chances to climb up to managing director. Hence, the significance of this day can’t be overstated.

When promotions are announced, it’s a big event—lots of champagne, speeches, and applause. But bonuses are much more discreet. Employees enter a conference room with the managing director, who gestures to a number on a tablet. There’s no formal printout; it’s all very private. “They point to a number on an iPad. They don’t want anyone overhearing,” he detailed.

For those feeling let down by their bonuses, the meeting can become pretty intense. “Donutification” refers to receiving a zero bonus, and it’s named for the circular resemblance of a zero. “It’s basically pushing someone to quit,” the banker noted, adding that many who receive a “doughnut” never return to the office.

Often, employees in such a situation might wait until their bonuses hit their accounts before tendering their resignations. “People not happy with their current roles tend to hang in there just for the bonus,” shared one private equity analyst.

But for many bankers, bonuses that used to be seen as an extra have become essential, often consumed by the rising cost of living. This dependency can lead to what some call “golden handcuffs.”

Many bankers told the Sunday Times that after saving and investing, their bonuses go toward vital expenses like mortgages, school fees, or significant life events such as weddings. “The excesses of the past are gone,” one banker remarked.

A former investment banker reflected on how, a decade ago, colleagues would spend their bonuses on luxury items like Rolex watches costing up to £500,000. She herself had purchased a diamond ring with some bonus money, which she treasures.

Changes in taxation have affected how bonuses are utilized. Jason Hollands from Evelyn Partners noted that a considerable portion of those receiving bonuses might now focus on saving or investing more of their payouts. With the tax burden at a post-war high, investing wisely has become increasingly crucial.

Even so, there’s still room for splurging. One analyst at a private equity firm mentioned he used part of his bonus on a £3,000 smart mattress that adjusts its temperature overnight. “I don’t have dependents, so the bonus lets me buy things I wouldn’t usually think about,” he said.