The utility you derive from money is relative. $500k is a lot until you come across someone similar to you who’s got $1m. Historically, no one was more conscious of this – or more prone to having a fit of petulance at being ‘underpaid’ than the senior bankers. But as banks allocate bonuses on a more differentiated basis, senior staff who might previously have thrown their toys out of the pram are having to make do. Nowhere is this newly stoical approach more aptly demonstrated than at RBS.
The Financial Times points out that Ross McEwan, chief executive of RBS, earned £3.8m ($4.7m) for 2015. This compares very poorly to the £8.5m earned by António Horta-Osório at Lloyds. McEwan is not less experienced than Horta-Osório; nor is he doing an easier job. If anything, McEwan’s task is the harder of the two: he’s saddled with the prospect of a $13bn fine related to the mis-selling of mortgages (before his time) as a result of which RBS is expected to announce another £6bn of losses. RBS is still 73% owned by the British government. Lloyds, meanwhile, is expected to announce big profits this week and could be returned to private ownership very soon.
So why does McEwan carry on? And what can bankers who feel they’ve been underpaid at the likes of Deutsche Bank learn from his example? Personal targets. McEwan says he isn’t at RBS to make more money than anyone else: he’s there to achieve his own personal mission, which he articulates as ,”restoring the pride in this organisation.” Try telling that to anyone upset at getting zeroed. Behind the scenes, however, McEwan’s enthusiasm may be waning. “Ross is so pissed off,” a former senior RBS executive who left recently tells the FT. “I’d be staggered if he was still around in a year’s time.”
Separately, UBS hasn’t treated its Asian bankers as generously as Credit Suisse. While Tidjane Thiam is reportedly hiking pay for his Asian bankers by 20% for 2016, Bloomberg says Sergio Ermotti is doing the opposite and cutting pay in its Swiss investment bank by 15%. The reduction reportedly follows a 20% pay hike for UBS’s Asian bankers in 2015, so everything’s simply back to normal then.
Is Credit Suisse generating massive margins by funneling private banking money into its investment banking operation? (WSJ)
The problem with being an EU expat in Britain now: ‘There is no systematic register of when expats arrived in their current place of residence. Worse still, EU officials think it is not feasible to create a comprehensive one before the expected Brexit date in 2019. So even if some rights are guaranteed, citizens will need to prove eligibility.’ (Financial Times)
Bank of America’s adding 100 tech and operations jobs in Ireland. (Irish Times)
Boutique M&A firms get their fees paid upfront because clients take pity on them. (Gadfly)
M&A bankers’ new worry: “Populism and politics have been joined by the third P, protectionism.” (Financial News)
How terrible code gets written by perfectly sane people (ChrisMM)
Eat young things and you will stay young. (New Scientist)