Bonus Expectations Aren't Converging. They're Splitting in Two.
The standard line is that bonus expectations across financial services are drifting toward transparency and predictability. From where we sit — running senior searches across London and Paris every week — the 2026 numbers say something different. Divisions that used to sit within a few percentage points of each other are now separated by twenty. Here's what that means for anyone building a team.
Bonuses have been the defining feature of financial services pay for forty years. What's changed in 2026 isn't that they matter less. It's that the same headline word — "bonus" — now describes two completely different products depending on which floor you work on.
Start with the aggregate, because it looks reassuringly dull. Johnson Associates, in its May 2026 first-quarter review, projects year-end incentives "flat to slightly positive across sectors." We tend to see bankers happy if their compensation goes up by 10-15% year-on-year. This sounds like it'll match that trend.
Then read the divisional table underneath it. Advisory and equity underwriting: up 10% to 20% or more. Equity sales and trading: up 10% to 15%. Fixed income sales and trading and debt underwriting: up 5% to 10%. Retail and commercial banking: up 2.5% to 7.5%. Private credit: down 2.5% to 7.5%.
That is not a flat market. It's a market where differences are becoming starker, not homogenising. The average conceals the spread.
The control functions have been left behind, and AI is likely to blame for it
The sharpest divergence isn't between banking and the buyside. It's between the revenue-generating floors and the functions that supervise them.
Barclay Simpson's 2026 UK surveys put a number on it. Among employers hiring compliance professionals, just 8% expect to pay higher bonuses this year. In risk, 78% say next year's bonuses will be smaller or the same. Base salary intentions tell the same story: 70% of risk employers and 75% of compliance employers plan increases of 1–4%, which after inflation is a standstill. Many compliance candidates reported their 2025 bonus was smaller than the year before.
Compare that to the front office. UK finance and insurance bonuses averaged £431 a week in the year to Q1 2026 — around £25bn in total, on the TUC's reading of ONS data — with annual bonus growth hitting 16% in the first quarter, the strongest real-terms quarter since 2008. Across the Atlantic, the New York State Comptroller reported in March that the average Wall Street bonus reached a record $246,900, up 6%, from a record $49.2bn pool.
The conventional argument was that as risk and compliance grew in strategic importance, their compensation would follow. It hasn't as more of the more mundane aspects of their work have been automated. Enforcement activity is also a plausible reason — FCA fines fell to £124m in 2025 from £176m the year before, and control-function budgets track perceived regulatory heat more closely than firms like to admit. But the effect on expectations is the point. These are not people who are unaware of what the trading floor is being paid. They read the same coverage everyone else does.
The regulation moved, and most candidates haven't caught up
Here is the development that should be reshaping conversations but we've yet to see it discussed with any degree of frequency.
On 16 October 2025 the PRA and FCA brought into force the most substantial rewrite of UK bankers' pay rules since the crisis. Minimum deferral for senior management functions fell from seven years to four. The retention period on deferred instruments was removed. Deferral rates became marginal rather than cliff-edged — 40% on the first £660,000 of a bonus, 60% only above it. The individual proportionality threshold rose from £44,000 of variable pay to £660,000 of total pay. Material risk taker identification collapsed into a single test: the top 0.3% of earners. The FCA cut its own remuneration rulebook by more than 70%.
Stack that on top of the bonus cap, which the UK removed with effect from 31 October 2023 and which still binds EU-regulated firms at 100% of fixed pay, or 200% with shareholder approval.
The combined effect is that a UK bonus in 2026 is a materially different instrument to a UK bonus in 2023: larger relative to base, less deferred, less encumbered. For a Franco-British firm like ours, that matters enormously. Two offers with identical headline numbers — one from a London-regulated entity, one from a Paris-regulated one — now carry different ceilings, different deferral profiles and different amounts of cash landing in year one.
"Transparency" is arriving as compliance, not culture
The claim that professionals are demanding clearer bonus mechanics is half right, and the half that's wrong is the interesting one.
What's actually happening is regulatory. The EU Pay Transparency Directive's transposition deadline passed on 7 June 2026, and its definition of pay explicitly captures variable components including bonuses. Employers must make the criteria used to determine pay and progression easily accessible. Reporting obligations now include the gender pay gap in variable components, the median gap in variable components, and the proportion of male and female staff receiving them. Candidates gain the right to see a pay range before interview, and employers lose the right to ask about pay history.
So the disclosure is coming regardless of whether anyone wanted it — and the evidence that employees did want it is thinner than the discourse suggests. In Ipsos Karian and Box's survey of 1,308 UK employees, 54% said they would prefer salaries to stay private, against 32% who thought they should be visible internally. Only 28% believed transparency would make employers explain pay decisions more openly. Sixty-five per cent anticipated at least one negative consequence; 42% expected resentment.
That gap between mandated disclosure and actual appetite is where badly prepared firms are going to get hurt. Publishing a bonus framework you can't defend is worse than not publishing one.
Where the sceptics have a point
We'd be doing you a disservice to present this as settled.
Johnson Associates is explicit that its own projections are "fragile given macro factors," naming geopolitical turmoil and private credit stress as the downside risks. Private credit's negative print is already visible, and listed alternatives managers were down 21% year to date at the time of the review. If credit stress spreads, the front-office numbers above are the first thing to be revised.
There's also a headcount effect flattering the per-head figures. Johnson Associates attributes stronger banking incentives partly to "record revenues and lower headcount," with firms cutting analyst-to-manager ratios and offshoring entry-level work as AI absorbs the grunt work. A bonus pool that rises 15% while headcount falls 5% is a different story from one that rises 15% on a stable base — better for the people who remain, worse as a signal about the pipeline behind them. And the divisional spreads we've quoted come from different methodologies across different markets, so treat them as direction rather than a like-for-like league table.
What this means if you're hiring
Three things, in order of how often we see them go wrong.
Stop presenting your bonus as a number and start pitching it as a structure. Post-PS21/25, deferral length, vesting profile and the cash-instrument split vary meaningfully between firms — and a candidate weighing a London offer against a Paris one is comparing two legally different products. If you can't explain your structure clearly in a first conversation, a competitor who can will win on a smaller headline.
Deal with your control functions deliberately rather than by default. Risk and compliance teams are absorbing a second consecutive year of standstill variable pay while sitting alongside colleagues on double-digit increases, and 61% of compliance employers already say staff shortages are hurting team performance. You either pay differently, build a progression story that isn't bonus-dependent, or plan to keep rehiring.
Get your bonus framework defensible before you're required to publish it. Under the Directive, the criteria are going to be visible whether or not they'd survive scrutiny. Firms that spend this year making their allocation logic explainable will be fine but this takes time.
Bonus expectations in financial services haven't become more nuanced. They've become more unequal, more regulated and more structural — and the gap now runs between divisions in the same building, not between markets. The firms that keep managing variable pay as a single annual number are most at risk of losing their competitive edge when it comes to hiring.
Croft & Co is a Franco-British executive search firm specialising in senior appointments across investment banking and asset management in the UK and France. More from our team at croftandco.com/industry-insights
