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Lunchtime Links: RBS proves its aptitude at getting investment bankers to do more for less

RBS

The Royal Bank of Scotland will still be paying bonuses this year. The bank’s £600m bonus pool has not been well received by everyone – it’s “astounding” said Chris Leslie, shadow financial secretary to the British Labour Party today – particularly in light of RBS’s £5.2bn loss. 

However, it’s worth remembering that RBS bonus pool has already been subject to shrinkage. Last year it was £785m. In 2010 it was £950m. In 2009 it was £1.3bn. In other words, RBS has more than halved its bonus pool in the past three years. Moreover, of the £600m total bonus pot for 2012, only £215m is going RBS’s ‘investment bankers,’ who made a profit. There are 11,200 people in the bank’s market division, so they’ll receive an average bonus of £20k each.

Some people would say this is more than RBS’s investment bankers deserve. But in an interview today, Stephen Hester said RBS is paying towards the bottom of the range and can’t cut pay much further for fear of losing staff. Given the state of the investment banking job market, this may not be strictly true: RBS could possibly pay less and investment bankers would still not leave. There are few places for them to go.

RBS has already proven highly adept at squeezing pay in its markets business, and there don’t appear to have been too many adverse effects so far. In 2012, markets contributed nearly 23% of operating profits to the RBS group. Revenues from rates trading improved 36% and revenues from credit trading improved 40% during the year.

The squeezing of RBS’s salespeople and traders isn’t over yet. In the presentation accompanying today’s release, the bank said it has more cost cutting to complete in its markets business. Away from staff, costs look strangely static. Guess who’ll be squeezed in 2013.

RBS cost cutting

Source: RBS

Meanwhile:

EU banks might evade the bonus cap by paying salary into an escrow account and only making it accessible if targets are met. (FT)

There is talk of some banks taking legal action against the EU bonus provisions. (FT)

“I find it difficult to imagine that we would now scrap this compromise,” Michel Barnier, the EU’s financial services chief, said. (Bloomberg)

Further proof that Asia is no longer the promised land for finance jobs as Hays results slump. (Evening Standard) 

Nikko Asset Management is hiring in Asia. (Bloomberg) 

Standard Bank is scaling back in Brazil. (Bloomberg) 

Two traders at UBS in Singapore say they were fired for gross misconduct because the bank was trying to cover up its involvement in rate fixing. (Bloomberg)  

Credit Suisse may have to scrap its PAF 2 bonus scheme. (IFRE)

Gary Cohn, COO of Goldman Sachs, tells Americans to quit complaining – there are plenty of jobs out there. (Times Dispatch) 

Ex-head of fixed income sales at Troika Dialog says she was called ‘crazy Miss Cokehead’ by colleagues. (Telegraph) 

 

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