Wage rise for financial services’ staff in bid to offset bonus cap

NEARLY two thirds of UK financial services firms have increased salaries in a bid to prevent an exodus of talent when the EU bonus cap takes effect next year, a survey found.

City of London
City of London

The cap, which regulators say is needed to crack down on excessive risk-taking at banks, sets a basic 500,000-euro salary threshold above which a bonus can be no higher than fixed pay, or twice fixed pay with shareholder approval.

Recruitment firm Robert Half Financial Services found 93 per cent of financial services executives were concerned about losing staff to international opportunities due to the cap, which will apply to awards for performance from 2014 onwards.

As a result, 65 per cent have increased salaries by an average of 20 per cent to offset the cap’s effect, while 60 per cent have increased staff benefits, the survey showed.

More than half of the executives said they were “very concerned” the bonus cap and resulting rise in base pay would create an unstable cost structure for their organisation.

Neil Owen, global practice director at Robert Half’s financial services business, said: “Financial services leaders are evidently concerned about the impending EU bonus cap and its potential impact on the industry’s talent pool, particularly as firms look to their top staff to pursue growth strategies.

“A number of large UK financial services firms have already been examining ways to offset the cap, potentially raising salaries and benefits to retain key employees.

“With the UK competing with other international centres for the world’s top financial services talent, firms will need to strike the balance between risk and reward, with additional employee remuneration potentially creating an unstable cost structure.”

Robert Half, which has an office in Leeds among 350 worldwide, said it polled 100 chief financial officers and chief operations officers at UK financial services firms during June and July for the survey.