Bumper paydays to stage a return, bankers say

Senior financiers in the City of London predicting a 44 per cent increase in payouts, while 60 per cent of bankers in the Middle East expect to receive larger bonuses than last year.

Canary Wharf business and financial district in London. Bankers are expecting big bonuses to make a return. Jason Alden/Bloomberg

Bankers in financial centres around the world are expecting bumper year-end bonuses, with senior financiers in the City of London predicting a 44 per cent increase in payouts.

Managing directors in the British capital said they were expecting average bonuses of £166,955 (Dh998,722) this year, up from last year’s average of £115,618, according to a poll by the financial services recruiter Astbury Marsden.

The survey last month on pay expectations involved 1,509 banking professionals at the managing director level.

It found that average annual salaries for senior bankers in the City rose by 6 per cent – double the rate of inflation in Britain – this year to £85,921.

With increasing global competition for top talent, banks in London are offering larger pay packages to lure senior financiers to change employers. The survey respondents said they had received an average pay rise of 29 per cent when they switched jobs, compared with an average 15 per cent rise last year.

“Despite pressure to keep a lid on bonuses, as the economy recovers and bank profits start to return, it’s not unreasonable that bonus expectations also rise,” said Mark Cameron, Astbury Marsden’s chief operating officer.

“City firms are showing a growing appetite for poaching the very best talent from rival firms in the last few months, suggesting that the City is now spending less time looking over its shoulder and more time investing in the best people.”

Meanwhile, bankers in other financial centres competing for the same top executives are also raising their hopes for a bumper year.

In the next 12 months, the UAE’s recruitment of financial services professionals would be the second-fastest growing in the world, senior bankers predicted in a separate poll by Astbury Marsden.

On the question of where hiring in the sector would expand the fastest in the coming year, 26 per cent of respondents said Singapore, while 21 per cent said the UAE.

London placed third with 19 per cent, followed by Shanghai (15 per cent) and Hong Kong (13 per cent). New York came last with just 6 per cent.

“Bankers in London seem to be feeling more confident, but in the UAE we are seeing even more confidence,” said James Randall, a sales manager for the Middle East at eFinancialCareers, a website which collates financial recruitment data.

“In a recent survey we conducted, we found that 60 per cent of bankers in the Middle East expect to receive larger bonuses than last year. We live in a global marketplace so the banks offering the top salaries need to compete internationally.”

The findings come as banks start to report improved financial results after several years of dismal performance following the global financial crisis.

HSBC, Europe’s largest bank, reported a 30 per cent increase in third-quarter profits to US$4.53 billion, while Lloyds Banking Group said profits rose 83 per cent to £1.5bn over the same period.

Facing public pressure over excessive pay in the banking sector, the European Union brokered a deal in February to cap bankers’ bonuses for 2014 at no more than twice their annual salary. The British government challenged that in the European Court of Justice.

The case has yet to be decided, but last week the European Banking Authority published a new rule which allows greater flexibility.