City workers at US investment banks are enjoying rising bonuses despite a squeeze in payouts from UK and other European lenders.
New figures reveal a widening transatlantic gap – bigger bonuses at US banks contrast with belt-tightening measures by their rivals headquartered on this side of the pond.
Bonuses for relatively junior banking staff at the likes of Goldman Sachs, JP Morgan and Morgan Stanley have jumped as much as 16 per cent this year, according to salary comparison website Emolument.
The average bonus awarded to UK-based analysts at US lenders grew from £15,000 in 2016 to £16,250 in 2017, while the average for associates rose from £35,000 to £40,500, according to Emolument.
Staff at Barclays, however, discovered yesterday that the lender has cut its bonus pool despite growing investment bank profits. Barclays’ 2016 pool is 56 per cent lower than the £3.5bn it stood at in 2010.
Last month Deutsche Bank told one in four of its staff they will receive no individual bonus for 2016, following a tumultuous year. They will instead share from a “group” pool, with payouts expected to be a fraction of previous years’.
Globally, bonuses are estimated to have fallen more than 10 per cent, research firm Coalition told Reuters yesterday.
Of the UK lenders to have reported so far, only Lloyds has raised its bonus pool, which went from £353.7m to £392.9m.
Majority state-owned RBS is expected to reduce bonuses when it reports today.
The bonus restraint comes despite a recovery in profits at two key lenders. With the exception of HSBC, results from UK banks have been promising so far, with both Lloyds and Barclays pulling in more than twice the profit than they did the year before.
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“The results in the bank sector this week are significant, not just for the sector, but as an indication that the UK economy is starting to normalise,” said Jane Sydenham, investment director at Rathbone Investment Management.
“While higher inflation and rising interest rates are a mixed blessing for consumers, they are generally good news for the banking sector... More than that, they bode well for the wider economy and we can all take some solace from this.”