Investment banks in the U.K. increased the base pay of some staff on average by about 20 percent in the past year, recruiter Astbury Marsden said.
Employees at vice-president level saw their pay rise to 97,500 pounds ($152,470) in the past 12 months, from 81,250 pounds in the previous year, the London-based recruitment firm said in an e-mailed statement today.
“These pay rises have inevitably meant that there will be less available in the bonus pot,” said Astbury Marsden managing director Jonathan Nicholson. “Managers will have to ensure that staff expectations are realistic.”
Banks including Barclays Plc, Credit Suisse Group AG and UBS AG have increased investment bankers’ base salaries as a percentage of total pay to comply with Group of 20 nations’ compensation guidelines that discourage bonus guarantees and permit pay to be clawed back if losses occur later.
“We are already hearing of concern amongst City employers that their staff may not be fully aware that these salary increments will have an adverse effect on their annual bonus,” Nicholson said.
Some staff at the vice-president level may be earning base pay of more than 160,000 pounds, the recruitment firm said.
Securities firms typically reserve a portion of revenue throughout the year to pay staff, awarding the bulk of the funds in year-end bonuses. Credit Suisse cut the amount it set aside in compensation for investment-banking employees by 20 percent from a year earlier as revenue at the unit fell 27 percent.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley have all cut the funds they set aside by the end of September to pay bankers and traders, partly due to a business slowdown.