RBS under fire as pay for Katie Murray set at £400,000 less than her predecessor

In today’s semi-egalitarian business society, the notion that senior executives, middle managers and operations professionals should be remunerated according to their abilities is commonly, and quite rightly, accepted.

This week, however, RBS, the world’s seventh largest interbank FX dealer by market share, and which raised the NatWest flag at RBS’ 250 Bishopsgate head office just over a year ago, marking an era of markets-related activity going forward, has come under significant fire from organizations and professionals in London for suggesting that it may pay its newly appointed female Chief Financial Officer some £400,000 less than her male predecessor if she manages to hit all targets.

Ms Murray, appointed as CFO two days ago, marked RBS out as Britain’s first major bank to have women in its top two executive positions after the current chief executive steps down after 2019.

Prior to her appointment, Ms Murray was deputy to RBS’s previous CFO Ewen Stevenson, and has been carrying out the job on an interim basis since his departure for HSBC in October.

The Hong Kong-born accountant was previously Finance Director for Old Mutual Emerging Markets, and spent 13 years at audit firm KPMG. Her accountancy background contrasts with her predecessor, Mr Stevenson, a former Credit Suisse banker, as well as William Chalmers, a Morgan Stanley veteran who was also considered for the role.

The bank confirmed yesterday to various media in London that Ms Murray will receive a £750,000 and a fixed share allowance of £750,000 per year, plus long-term performance-based awards up to a maximum of 200 per cent of her salary. The salary is less than the £800,000 per year Mr Stevenson received when he did the job between 2014 and October this year.

Today, this gap was noticed, and a series of gender equality campaigners have now stated that Ms Murray should be remunerated at the same level as her predecessor for doing the same job.

Sam Smethers, chief executive of the Fawcett Society this morning told British press “Women consistently find themselves undervalued compared to their male counterparts. RBS needs to be clear of any objective reason for the differences in pay and reward. At first glance she may have an equal pay claim.”

Looking at the full package, Ms Murray could earn £3.1million a year if she hits bonus targets, £400,000 less than predecessor Ewen Stevenson when all aspects of her remuneration are considered and compared to the package Mr Stevenson received.

RBS’s corporate banking head Alison Rose is seen as the most likely replacement for its chief executive Ross McEwan, meaning its two most senior jobs could both be held by women in just a year’s time. Last year, senior banker Jayne-Anne Gadhia warned that the Tier 1 bank had suffered from a ‘very male culture’ which was ‘win-lose’ when she worked there from 2001 to 2007.

According to aggregated data researched by executive search firms in London, men at Barclays’ investment bank arm were paid 48% more than women last year, and HSBC had the biggest gap of any large business, with a gap of 59%.

At RBS, the difference was 37%. It is clear, however, that banks have been reducing pay for newer senior staff regardless of gender, and cutting their pension benefits in a crackdown on excess.

As has always been the case, it is actually more financially lucrative to be a trader rather than a senior executive within a Tier 1 bank.

RBS has been recently opening itself back up to the OTC derivatives sector, its investment banking division, NatWest Markets having met with FinanceFeeds several times in London recently, demonstrating a pragmatic approach to extending prime brokerage credit to OTC counterparties, contrary to the view of many Tier 1 FX dealers in their reluctance to take credit risk on non-bank OTC markets.

Two years ago, FinanceFeeds looked into the remuneration opportunities within Tier 1 financial institutions in London and New York and found that a trader in a non-directorship position, with no board membership and who works on a city desk is likely to earn an average of £221,000 in London, with bonuses taking this up to over £1 million, therefore considering that senior executives can really only consider their base salary plus fringe benefits such as private health insurance and a company car and pension scheme to be an absolute given, traders work for the bonus and are not bound by all of the reporting and public declaration responsibilities that C level executives are.

Yes, it’s a different animal, however there is no evidence to say that a gender gap in pay exists among traders, despite women being very much under-represented in the trading desks and dealing rooms of the Tier 1 market makers.