London’s investment bankers and lawyers have made more than £۱bn from a frenzy of takeover deals this year, sparking anger over high City pay during the cost of living crisis.
The value of mergers and acquisitions of UK stock market listed companies has surged ۱۷۵% in ۲۰۲۶ to $۱۳۲.۹bn (£۱۰۰bn), according to the London Stock Exchange, as overseas buyers snap up British companies at record pace.
Fees paid to investment bankers, lawyers and accountants working on these deals topped £۱.۲bn, official filings suggest, helping drive multimillion-pound pay packets.
The bumper fees were fuelled by a string of corporate takeovers driven by a flood of private equity cash and acquisitive American buyers targeting undervalued British businesses. The spree of acquisitions of listed companies has led to concerns over the future of the London stock market.
The takeover frenzy has fed advisory business at the biggest banks and law firms in the City. Bankers at JP Morgan have been the busiest, advising on more takeovers involving UK companies than any other bank this year – a total of ۱۴ deals worth a combined $۸۹.۴bn (£۶۷.۶bn), according to the LSE. The leading law firm was Slaughter and May, it found.
UK bankers have also benefited from soaring bonuses, after the government scrapped a rule capping bonuses at two-times annual salaries in late ۲۰۲۳. Each bank now sets its own upward limit. Big investment banks such as Goldman Sachs now allow performers to be paid up to ۲۵ times their annual salary.
The surge in business comes while the banking sector lobbies against paying higher taxes in the UK.
Jamie Dimon, the billionaire boss of JP Morgan, has issued several warnings to Andy Burnham and his chancellor, John Healey, against raising taxes on banks in his inaugural budget on ۲۸ October. The industry body UK Finance echoed the view this week.
Lenders in the UK currently pay a ۲۸% corporation tax rate, higher than the standard ۲۵%, as well as a separate surcharge on their UK balance sheets.
The most lucrative deal in the City this year was the £۱۰.۶bn takeover of the lab testing group Intertek by the private equity firm EQT, which is expected to generate more than £۳۷۰m in fees. Morgan Stanley, Barclays and Deutsche Bank are working on the deal for EQT, while Intertek paid Goldman Sachs, JP Morgan Cazenove and PJT Partners.
Lawyers at top City firms have started to out-earn some bankers. Partners at the “magic circle” firms Linklaters and Clifford Chance were paid an average of £۲.۵m and £۲.۳m respectively in the year to April, their highest ever. A&O Shearman partners were paid £۲.۲m.
At the boutique bank Evercore, which the LSE said had advised on five deals in the UK stock market this year, the firm’s “members” – senior managing directors who are dealmakers – were paid an average of about £۲m. Its best-paid member collected £۱۶.۲m this year.
Overall, dealmaker fees are likely to be even higher this year as the figures do not include deals which did not complete, were rejected or for which documents have not been published – including the £۵.۷bn takeover of the FTSE ۱۰۰ airline easyJet by the private equity firm Apollo Global Management, agreed last month.
While pay continues to climb in the City, millions of UK households are struggling with the cost of living.
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Charlotte Brumpton-Childs, the national secretary at the GMB union, said financial brokers were paid huge sums “while the people who keep this country moving struggle to make ends meet”.
“The UK needs to seriously re-examine what we value and hold dear – is it the people who build, who create, who look after us and our loved ones in their hour of need? Or is it a bloated financial sector?” she asked.
Paul Nowak, the general secretary of the Trades Union Congress, repeated his call for a windfall tax on lenders’ profits as interest rates have risen, saying that “if banks can afford bonanza payouts for their top brass, they can clearly afford to pay more tax”.
“People up and down the country are struggling, and things could get a lot worse with energy prices set to shoot up,” he said.
Earlier this month figures from the Office for National Statistics showed that average growth in total earnings, including bonuses, slowed to ۳.۹% in the three months ended in July, down from ۴.۱% in the three months ended in June.
There are fears that, while dealmakers’ pay is rising on the takeover boom, investment banks could lose out on revenue from their sell-side research and work on flotations as more companies leave London’s stock market and fewer line up to join.
Despite hopes that ۲۰۲۶ could spark a revival on the UK stock market, there were just seven listings in the first half of the year, raising £۵۷۷m in total, according to data from the professional services company EY. However, this week, Airtel Money, the mobile money arm of Airtel Africa, said it was planning one of the biggest UK listings in years.
