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Business
Senior City staff expect 21% bigger bonus
From the Financial Times of Mon, 22 Dec 2014 00:02:11 GMT
London's financial district, known as the Square Mile©Getty

Bankers, traders and City executives expect 2014 bonuses to grow by a fifth, despite political and public pressure to curb payouts, a survey has found.

Days before an EU cap on bankers’ bonuses comes into force on January 1, a survey of 1,500 senior City workers found the majority were expecting their bonuses to rise by 21 per cent to an average of £124,680 — up from £102,930 a year earlier.

Confidence has also increased, with 40 per cent of City workers expecting a bigger bonus this year, up from 34 per cent in 2013.

“Despite shareholder and public pressure to limit bonuses, and with the EU bonus cap now set to be introduced at the start of 2015, City staff clearly feel that their employers are in the position to reward them well,” said Adam Jackson, director at the City recruitment firm Astbury Marsden, which conducted the survey.

“Business conditions in the City have improved significantly over the past year, which is now translating to rising bonus expectations.”

Banks are readying bonus plans, which will need to be approved by the UK’s two financial regulators in early 2015. The five banks that paid £1.1bn to the Financial Conduct Authority last month over the foreign-exchange scandal will extract fines by clawing back bonuses already paid out. It will be the first time the banks have applied such a measure on a wide scale; typically, they have restricted themselves to withholding unpaid bonuses.

The FCA has repeatedly warned banks to take conduct issues into account when allocating bonuses so as to minimise the impact of large fines on shareholders. If banks are deemed not to have done this, the FCA and the Prudential Regulation Authority can withhold their approval of a bonus plan.

The rising optimism shown in the survey comes ahead of the introduction of a new EU cap on January 1, which restricts bonuses to 100 per cent of salary — or 200 per cent with shareholder approval.

A 21 per cent rise in average payouts would bring bonuses to 60 per cent of average salary, according to the survey.

However, workers in private equity were expecting an average bonus of £145,000 or 115 per cent of average salary for the sector.

The survey also showed that 54 per cent of respondents, a record proportion, would leave their job if they were unhappy with their bonus, compared with 45 per cent the year before.

A separate survey has found that women are moving into the higher-rate tax band faster than men. The number of females who became 40 per cent taxpayers rose by 17 per cent in the year to the end of March, compared with a rise of 13 per cent for men, according to Radius Equity, an investment firm.

The number of women paying the top 50 per cent tax rate, for those earning over £150,000, rose 9 per cent over the past year, compared with 8 per cent for men, according to Radius.



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