Rabobank Groep, the biggest Dutch mortgage lender, announced a two-year freeze on bonuses and wage increases in a collective wage deal with unions as it cuts costs and seeks to appease public outrage on banker pay.
Dutch workers will get a 1.5 percent fixed pay rise in 2014 and a one-time bonus, the Utrecht, Netherlands-based lender said in a statement today. Wages won’t then be increased until the end of 2015. Rabobank’s board members won’t get a 2013 bonus and won’t receive any pay increases until 2016.
Rabobank, formed in 1898 as a cooperative to lend to Dutch farmers, plans to cut 3,000 jobs in its retail bank in the Netherlands in 2013 and 2014. It said last month that worker pay and benefits needed to be scaled back. At least 1,500 job cuts a year from 2015 onwards may follow as consumers switch to online and mobile banking, Chairman Piet Moerland has said.
“A more austere labor agreement is necessary,” the lender said. “Eliminating variable remuneration illustrates the bank and the unions have taken the critical public opinion seriously.”
The agreement was reached after negotiations with three trade unions, and is scheduled to take effect from July. The firm currently has about 28,000 workers in its Dutch retail banking unit.
The Netherlands was forced to nationalize lender SNS Reaal NV in February at a cost of 3.7 billion euros ($4.8 billion), sparking calls to reduce compensation in the industry. Dutch Finance Minister Jeroen Dijsselbloem plans to introduce legislation capping bonuses at 20 percent of fixed salaries and has called upon banks to reduce overall pay.
“Remuneration in the banking industry is still structurally higher than in other, comparable sectors, which is incomprehensible in light of the situation we are in and the amount of public money spent on keeping this industry going since 2008,” Dijsselbloem told lawmakers in The Hague in February, after SNS Reaal’s bailout.
Rabobank’s profit fell 20 percent to 2.11 billion euros after bad-loan provisions increased in its domestic market. The company plans to reduce costs in its Dutch bank by 10 percent by 2016 from about 4.5 billion annually.
Rabobank follows ING Groep NV, the biggest Dutch financial-services company, which eliminated bonuses for 19,000 employees falling under collective wage agreements as of January, 2012.