Major banking employers required to release information in wake of financial crisis
The top 1,500 bank staff in the UK earned an average of £1m each in 2011, according to new regulatory filings by major banking employers.
The information, required by the EU in the wake of the 2008 banking crisis, has been published for only the second time and sheds fresh light on the way banks regard their most senior staff – the executives who influence the risks their bank takes.
The firms are not required to publish comparisons with the prior year but previously published information indicates the bankers’ rewards were lower in 2011 than 2010.
The new end-of-year disclosures come as banks prepare to hand out bonuses in the coming weeks for the 2012 financial year.
Jon Terry, global head of financial services HR practice at PricewaterhouseCoopers, said bonuses at European banks could fall 50% this year. “For the first time I can remember, we will see a clear distinction between US-headquartered banks and European banks,” Terry said. US bank bonuses may be down by just 20%, he said.
Goldman Sachs’ filings, published on Friday, showed it handed an average of £1.8m to its 95 code staff – those who are judged to be responsible for managing and taking risks at the firm – down from £4m a head in 2010.
The top payer in 2011 was Goldman’s US rival JP Morgan, which paid its 119 code staff an average of £2.2m in 2011 – a year when it reported record net income of $19bn, a rise of 9%. The lowest paid were at Swiss bank UBS – hit by the £1.5bn of losses caused by rogue trader Kweku Adoboli. However, its 177 code staff still received £700,000 on average and in April some were offered “one off” share awards, which could pay out in 2015.
Barclays was the highest payer of the UK banks that have investment banking arms, paying an average of £1.2m. The 316 staff at bailed out Royal Bank of Scotland received an average £820,000, while HSBC’s average was £980,000. These are all lower than figures for the 2010 financial year.
The 126 code staff of US firm Bank of American Merrill Lynch received an average of nearly £1.5m. The bank also paid a total of £10.9m in guarantees to six staff.
Bankers receive fixed salaries, which are enhanced by bonuses in cash and shares deferred over three and five years. UBS discloses that part of the bonuses it paid for the 2010 financial were subject to “downward adjustment” when one of the components was paid in March 2012. JP Morgan describes how in the third year of its deferral bonuses, a component can be cancelled if the division is loss-making.
Regulators, led by the Financial Services Authority, have demanded changes to the way bankers are paid following the financial crisis, which exposed how bonuses paid entirely in cash were handed out and could not be reclaimed when banks nearly collapsed.
A year ago an analysis of the filings produced an average of £1.8m, although the sample of banks was different.