Financial firms up salaries to prevent exodus ahead of bonus cap

Nearly two thirds of financial services firms have upped employee salaries to stop a mass exodus as a result of the EU bonus cap, according to a survey by recruiter Robert Half.

Some 65 per cent of the 100 chief financial officers and chief operation officers surveyed have increased salaries by an average of 20 per cent in response to the cap, while 60 per cent have increased benefits.

Nearly all (93 per cent) were "very" or "somewhat" concerned about losing talent as a result of the cap, and more than half said they were "very concerned" the bonus cap and resultant increase in base pay could create an unstable cost structure for their business.

The bonus cap will limit the variable pay of bankers earning over €500,000 (£426,000) to 100 per cent of salary, rising to 200 per cent with shareholder approval.

Neil Owen, global practice director at Robert Half Financial Services, said:

With the U.K. competing with other international centers 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.