Remuneration for senior managers at Mashreqbank has more than doubled in the past nine months compared with the same period last year, despite the bank's profits falling 40 per cent.
The company's financial statements, released yesterday, showed "senior management remuneration" for the company rose to Dh52.2 million (US$14.21m), from Dh20m, an increase of 161 per cent from the same period last year, when remuneration was hit by large provisions against bad loans.
The bank, which is the fifth-largest in the UAE by assets, revealed a drop in net profits in the past nine months from Dh1.1 billion to Dh708m, largely driven by a fall in lending.
"There was no increase in senior management staff or senior management remuneration during the year 2010. There were certain reversals of provision taken during 2009, which resulted in 2009 numbers being lower compared to 2010," a spokesman forMashreqbank said while confirming the figure submitted to the Dubai Financial Market was accurate.
Typically, remuneration at banks is composed of both salary and bonuses, which are linked to profits. A reversal in provisionwould mean increased profits and an increased bonus pool for the period. Analysts said the bank's decline in profits was expected.
"It wasn't surprising for them," said Nancy Fahmy, an analyst at Beltone Financial in Cairo.
"Their business activity seems to be very, very slow.
"The bank, as a lot of UAE banks, has been suffering from slow business volumes. It's stopped growing in 2010. All UAE banks are controlling costs," she added. "No bank has increased hiring."
Mashreqbank cut 175 members of staff early last year as the recession began to take hold and has hired only 13 trainee staff since then.
Faisal Hasan, the head of research at Global Investment House, said the most likely explanation for the increase in remuneration was to make sure its senior management stayed put at the bank and did not seek employment elsewhere.
Mashreqbank is unique among the UAE's largest banks in revealing its pay levels for senior management.
Many lenders have been slow to adopt international standards of transparency.
Those that do not disclose pay levels, however, may find their image suffers overseas, said Nick Nadal, the director of the Hawkamah Institute for Corporate Governance, which promotes the improvement of standards of transparency in the region.
"The companies that are more transparent would typically have better perceptions from an investor's perspective," he said.
"But there are not enough companies that disclose. There's no level playing field. "Regulations need to be put in place."
Mr Hasan agreed increasing corporate governance standards at Mashreqbank and other banks in the region would be of benefit in the long run.
"As we integrate more with international markets, they will demand that kind of transparency," he said.
Abu Dhabi Commercial Bank is the only other large bank in the UAE to have released a figure for staff remuneration, recording an increase for its total staff expenses, not just senior management, of 28.6 per cent to Dh265m in the past three months.