Banks double bonuses for 2016, but STILL traders and executives are not satisfied

The last two years have been tumultuous times for the world’s major interbank FX dealers, as low volatility and reduced revenues blighted corporate performance during 2014, followed by geopolitical turmoil in 2015 which added to the burden of regulatory fines and class action law suits that ran into the billions of dollars. As far as […]


The last two years have been tumultuous times for the world’s major interbank FX dealers, as low volatility and reduced revenues blighted corporate performance during 2014, followed by geopolitical turmoil in 2015 which added to the burden of regulatory fines and class action law suits that ran into the billions of dollars.

As far as traders, associates, directors and senior executives were concerned, many of London’s bank FX desks remained stagnant in terms of employees moving to other positions, largely due to the significant staff reductions made by large companies such as Barclays (19,000 staff worldwide gone in two years, with 5,000 from the investment banking division), and also due to more favorable bonuses at certain firms compared to others.

This year, remuneration is set to rocket, however employees across the board are not satisfied, even though in certain cases, bonuses are likely to double those paid last year.

Emolument, a benchmarking site for salaries, carried out research on this matter and concluded that compensation has risen as follows this year on average:

At associate level, compensation rose from £30,000 last year to £50,000 this year.

For VPs, the figure doubled, from £60,000 to £121,000.

At Director level, bonuses rose from £166,000 to £316,000.

For Managing Directors, bonuses rose from £300,000 to £618,000 – while total compensation (including salary) rose 52%.

The research conduced that, despite the increases in bonuses, 45% of employees at Bank of America Merrill Lynch were disappointed by their bonuses, with only 26% being satisfied, representing the company with the most dissatisfied staff as far as bonuses are concerned.

Surprisingly, Credit Suisse fared similarly, which is interesting when considering that, unlike Bank of America Merrill Lynch, Credit Suisse actually issued a notice last week that it was cutting bonuses within its investment banking division by 36%, with CEO Tidjane Thiam also set to take a substantial hit to his bonus.

At Credit Suisse, the research by Emolument stated that 42% were disappointed with their bonus, whereas 27% were not disappointed.

The monetary amount of bonuses, however, is only part of the reason for discourse among employees.

Employees are also concerned about cost-cutting measures, the continual worry of redundancy when there are so many other similarly-skilled professionals also in the firing line, thus making re-employment a very competitive business, as well as technology which automates certain traditional jobs.

FinanceFeeds research reinforces this mindset, and deduces that such concerns are not new.

In 2014, traders preferred to remain at Barclays PLC (LON:BARC) despite its flagging performance as a corporation compared to rivals HSBC and Royal Bank of Scotland Group plc (LON:RBS), largely due to the employment conditions at Barclays which were preferable in terms of working environment as well as salary.

During that year, Barclays paid its FX traders much higher bonuses than HSBC and RBS despite the lower annual results and worry of redundancy, and as a result traders were not tempted to leave Barclays for its rivals.

Alice Leguay, COO at Emolument made a statement yesterday on the research:

Lack of transparency in any organisation and its culture when it comes to discussing bonuses has a huge impact on productivity.”

“No matter how much a bank pays its employees, if the process is shrouded in secrecy, the levels of paranoia and suspicion wipe off goodwill earned through higher bonus payments” – Alice Leguay, COO, Emolument.

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