Bank of America Corp. is increasing salaries for some managing directors at its investment bank in the European Union by about 20 percent to $500,000, according to a person with knowledge of the plan.
The raise in base pay for client-facing managing directors is effective immediately and comes amid tougher EU rules on bonuses in the region, said the person, who asked not to be identified because the details are private.
European regulators are preparing to outlaw bonuses that are more than twice fixed pay to prevent a repeat of the risk-taking that helped spark the 2008 global financial crisis. Banks are looking for ways to sidestep the stricter EU bonus rules on compensation, which will apply to awards given in 2015, based on this year’s performance.
Lenders will be able to ask national regulators to exempt staff earning as much as 1 million euros ($1.3 million), the European Banking Authority said on Dec. 13. The EBA would have to approve any such waiver, while senior managers aren’t eligible for the exemption.
Goldman Sachs Group Inc. (GS) is planning to increase fixed pay for some senior employees and traders in Europe as regulators prepare to limit bonuses in the region, a person with knowledge of the plan said last month. The bank plans to make role-based payments to some senior bankers and traders in addition to their annual salaries and bonuses, the person said.
Sky News reported Bank of America’s plans earlier today. Victoria Garrod, a spokeswoman for Bank of America in London, declined to comment.
Britain was home to 2,188 investment bankers earning more than 1 million euros in 2012, the most in the EU, while Spain had 37, according to the London-based EBA. France and Germany had 117 and 100 respectively.
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