EU bonus caps will hit UK banks hard
MORE than 3 500 bankers in Europe earned à1- million (about R13.87-million) or more last year after a big jump across the continent and in Britain, which had 12 times as many high earners as any other country.
Figures from the bloc’s banking regulator on Friday showed London-based bankers would easily have bust the European Union bonus cap rule coming into effect next year. Bonuses for the highest earners were almost four times fixed pay.
The scale of bankers’ bonuses remains a hot topic among politicians and the public. Many blame high pay for the risktaking that led to the 2008-09 financial crisis and a series of scandals.
The EU is trying to curb excessive pay, and has said that from next year bonuses for “risk-taking” staff must not exceed annual salary, or twice that if shareholders give their approval.
Latest European Banking Authority (EBA) figures show that 3 529 bankers in the EU earned at least à1- million last year, up 11% from 2011.
Britain accounted for 2 714 of those top earners. This reflected London’s dominant position as Europe’s financial centre and home to major operations for banks from the US, Switzerland and other countries outside the EU.
Figures show that banks in Britain and France in particular need to adjust pay structures to meet the new the rules because variable pay was almost four times fixed pay.
At least 10 000 bankers, most of them in London, are expected to be affected by the new bonus cap. Banks such as Barclays, Deutsche Bank and HSBC are expected to cut bonuses and raise fixed pay to comply with the new rules.
The EBA figures, part of data-gathering efforts as the EU finalises its rules for the bonus cap, offer a rare glimpse into the pay of bankers across Europe.
Of the British bankers earning more than à1- million, 2 188 worked in investment banking, 62 were in retail banking, 198 were in asset management and 266 were in other areas.
The watchdog said that 212 bankers in Germany earned more than à1- million, up by a quarter from 2011.
There were 177 bankers similarly well rewarded in France, up 9%, and 109 in Italy, up 14%.
There were also significant rises in most Nordic countries.
In Spain, which had to bail out its banking sector last year, the number earning at least à1- million fell by a fifth to 100. However, the average remuneration for those 100 was à 2.2- million, higher than Britain and Germany.
Some countries, such as the Czech Republic and Estonia, had no million-euro earners, while Poland had seven.
Ireland, which was almost bankrupted by its banking crisis, had 16 in the top bracket, down from 21 a year earlier.
Cyprus had three and Greece one.
The figures include high earners from employees based in each country, rather than the domicile of the bank, so the UK figures include high earners from international lenders such as Goldman Sachs and JPMorgan. —