Bank bonuses 'to tumble in 2009'

Bank bonuses reached their peak levels in 2007

Bankers' bonuses in the UK are likely to be down 70% from their 2007 peak, the Centre for Economics and Business (CEBR) has forecast.

It also said that "the public has a completely inaccurate perception of what makes up bankers' bonuses".

CEBR said that increased competition in financial services and tougher regulatory control could help tackle the problem of excessive fees and pay.

On Monday, the prime minister was said to be "very angry" about bank bonuses.

The CEBR forecasts that even in 2012 bonuses will be only back to 48% of their 2007 peak levels.

"So it looks as though the market will - having got it wrong initially - sort out the excess bonus problem," said the CEBR.

Different ways

The CEBR said that different companies handle bonuses in completely different ways.

Some of the numbers may sometimes look large but that is the nature of variable pay based on results CEBR

"At one extreme, many brokers in banks are in effect paid almost entirely on commission and although the commission is called a bonus, it is in reality a commission," it said.

"Some of the numbers may sometimes look large but that is the nature of variable pay based on results. There is no case for not paying these bonuses."

"Some other bonuses are contractual and range from relatively small amounts for bank tellers to rather higher amounts for some of their managers," said the CEBR.

Simon Culhane, Securities & Investment Institute chief executive, also said: "We need to differentiate between the modest incentive payments of about 10% of salary that are made to ordinary banking staff, such as cashiers, and the significant money paid to senior management."

'Rewarding failure'

Gordon Brown's spokesman said on Monday that the prime minister wanted bankers to consider waiving their right to them.

Earlier Mr Brown said - amid reports the taxpayer-saved RBS group is to pay out �1bn in bonuses - the culture of rewarding failure was being ended.

Conservative leader David Cameron said on Monday that he had been warning about the dangers of excessive bonuses for many months.

Meanwhile, the Liberal Democrats Treasury spokesman Vince Cable said: "The government must freeze all bonus payments for employees of semi-nationalised banks and ensure that the pay details of those earning over �100,000 a year are published."

E-mail this to a friend

Printable version