BANK job losses are set to be matched by tough bonus cuts as the industry seeks to keep costs under control, with Barclays and Deutsche Bank yesterday joining the long list of institutions thought to be preparing to keep a tight hold on the purse strings.
Deutsche Bank is expected to cut its bonus pool by up to 20 per cent, as part of a clampdown on costs which was announced last September.
That review established a new remuneration panel, as well as increasing the vesting time for executives’ share bonuses. The bank is also in the process of cutting 2,000 jobs.
Barclays is believed to be looking to chop the same amount from its pay costs, reflecting its third-quarter results, which said the bank is cutting the investment bank’s compensation ratio from 47 per cent to 39 per cent.
It too is thought to be considering cutting 2000 jobs to cut costs back further. But they are not the only banks looking at trimming bonuses and jobs.
Investment banks have had a tough year with the poor economic outlook and low deal levels keeping a cap on earnings.
Bonuses are designed to be variable partly to reflect individual bankers’ performance but also to make sure banks can easily cut their costs in lean years, like 2012.
RBS’ bonuses are likely to be cut as the bank faces a Libor fine of hundreds of millions of pounds, while HSBC is believed to be restricting bonus rules after their fine for having poor money laundering controls.
Even Wall Street’s highest paid boss Jamie Dimon of JP Morgan is likely to have his payout slashed as a result of the London Whale derivatives trading losses last year.