City bankers expect bigger bonuses despite clampdown
Almost two thirds of City of London workers expect their bonus this year to be the same or higher than what they received in 2008, according to new figures that will raise eyebrows among those seeking to guard against a return to 'business as usual' in the banking sector.
The report by recruitment consultants Morgan McKinley also found that only one in four workers said their employer was restructuring their compensation package, suggesting that banks were not revising the structure of their pay policies despite regulatory pressure to do so.
Eighty two percent of the 200 financial service professionals who participated in the survey said they expect to receive a bonus for 2009/2010 and of these, 78.9% said they expect this payment to be similar or higher than the amount they received for 2008/09. This means that just under two thirds, 63.5%, expect a similar or larger bonus.
Andrew Evans, managing director of Morgan McKinley’s financial services division, said: “This must be seen in the context that last years’ bonus payouts were at suppressed levels compared to the previous two years. By no means do these bonus expectations imply a return to the boom times and it will be interesting to see how these expectations compare to actual payouts in the New Year."
When asked if there were plans to restructure the components of their compensation packages, 27.8% said their employer had or was planning to implement a restructure. This follows efforts by the UK authorities to clamp down on excessive bonuses by introducing clawback provisions and deferred bonus payments, and to make share-based remuneration a greater percentage of pay.
Evans said: "It has been the subject of speculation that any change would be an increase in basic salaries to compensate for a decrease in bonus amounts but, in fact, more respondents indicated that, at their firms, basic salaries were unchanged and bonuses had been reduced. It is still early days and so we will have to wait and see how the pay structures change over the coming months.”
The figures suggest that little has changed in the UK financial services sector, despite the best efforts of UK authorities to rein in large compensation packages and avoid a 'business as usual' approach to banking.
The Treasury is today set to meet representatives from 11 foreign-owned banks with operations in the UK today, in an effort to persuade them to comply with new Financial Services Authority rules on pay.
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