Business Irish

Friday 18 October 2019

5,000 EU bankers earn over €1m - despite cap

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Huw Jones

The number of bankers in the European Union paid more than a million euro a year rose in 2017 to nearly 5,000, even after regulators capped bonuses.

Most of them were based in Britain, according to data from the European Banking Authority (EBA). However, as that country is due to leave the bloc at the end of this month some highly-paid bankers are expected to move to new hubs in Ireland and on the continent.

The EBA said yesterday that 4,859 bankers were paid more than a million euro in 2017, including bonuses, up from 4,597 in 2016.

After taxpayers bailed out lenders during the financial crisis a decade ago, the EU capped bonuses from 2014 to no more than basic salary, or twice that amount with shareholder approval.

In Ireland, stricter pay restrictions - including a salary cap of €500,000 for most bankers - applies at the bailed-out banks.

EBA said the average ratio of variable to fixed pay for the high earners continues to fall, down from 104pc in 2016 to 101.08pc in 2017 as the cap bites. It was 123pc in 2014 and 118pc in 2015.

The higher earners were predominantly based in Britain, totalling 3,567 in 2017 or 73.3pc - 38 more than in 2016. Germany had 390 in 2017, Italy 201, France 233, and Spain 161.

Many big London-based banks have since opened new hubs elsewhere in the European Union in preparation for business after Brexit.

Britain had opposed the introduction of the bonus cap, saying it would prompt banks to blunt its impact by raising basic pay, making it harder for lenders to cut costs in a market downturn. EU financial rules have been embedded into UK law as part of preparations for Brexit on March 29.

Bank of England Governor Mark Carney has hinted that the bonus cap could be among the bloc's rules that are reviewed by the UK in future, but not at the risk of damaging overall resilience in the sector.

As bankers come under pressure to rein in bonuses, asset managers are escaping the full impact of the cap.

The EBA said that in the banks' business area of asset management, the average ratio of variable to fixed remuneration increased from 358pc in 2016 to 402pc in 2017, still far exceeding the maximum ratio of 200pc.

"Several member states allow the application of waivers for staff in this business area, although CRD IV (EU bank capital rules) does not explicitly provide for this possibility," the EBA said in its review.


Irish Independent

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