Major international banks may still pay out big bonuses to high flyers this year even as the pandemic saps the global economy, as fears of losing ...
LONDON: Major international banks may still pay out big bonuses to high flyers this year even as the pandemic saps the global economy, as fears of losing talent to rivals during a trading boom trump worries of a big compensation bill.
"These banks move broadly in lockstep, no one wants to cut anything first," said Simon Patterson, managing director at Pearl Meyer, which advises more than 1,000 companies on employee compensation structures annually. "Financial markets are cyclical but what we face is so unprecedented, no one truly knows whether next year is a feast or famine," Patterson said.Britain's Prudential Regulation Authority banned bonus payments to top management and material risk takers at the UK's biggest deposit-taking banks when Europe's COVID-19 crisis escalated in March, meaning some top traders could miss out.
The European Central Bank said last month that EU-regulated firms must"adopt extreme moderation with regard to variable remuneration payments until 1 January 2021", though this restriction ends before most EU lenders set bonuses for 2020. There may however be pressure to adapt their models, in a bid to keep costs in check and avoid a backlash over huge payouts during a recession.Some are reducing the amount paid to new hires. Data from recruitment consultant Morgan McKinley showed the average salary rise for those moving from one UK finance job to another dropped to 15per cent in the first half of 2020 compared with 19.8per cent a year before.
Justine Woolf, director of consulting at UK-based Innecto Reward Consulting, said banks were also looking to increase bonuses to staff who helped them hit certain environmental, social and governance goals, so that payouts were more aligned with good corporate behaviour.
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