Could this be the start of something? Employees at British bank TSB have been informed this morning that they will not receive their usual bonus for 2018. Former senior employees of the bank are also complaining that their deferred bonuses are being withheld.
A spokeswoman for the bank confirmed that bonuses will not be paid under the bank's standard "TSB Award" scheme. Instead, all employees at the bank will receive an award of £1.5k to reflect their "exceptional team effort."
The TSB Group is a retail banking company, meaning that its bonuses aren't exactly huge anyway. Even so, senior managers in TBS's compliance, risk, finance and technology functions stand to lose out from the removal of this year's bonuses. - In 2017, 64 material risk takers at the bank were paid an average of £466k each in total compensation, of which around £234k was a bonus. The implication, therefore, is that all things being equal they will each lose around £234k in bonuses this year, but will get £1.5k to thank them for their effort.
One former employee of the bank says this morning's announcement also deprives former TSB employees of deferred bonuses that were due to vest this year. "Why this should affect previous awards, I don't know. It seems particularly harsh," he said.
The TSB's decision to withhold bonuses comes after the bank suffered serious problems in the migration of its IT systems from Lloyds to new owner, the Spanish bank Sabadell. Chief executive Paul Pester stepped down as a result, and TSB made a loss before tax of £107.4m in the first six months of the year.
For most people in banking, the TSB's bonus move will be horribly reminiscent of Deutsche Bank's bonuses for 2016. Then chief executive John Cryan took the decision to pay no performance bonuses for the year to anyone above associate level and to replace them with retention bonuses which are contingent on Deutsche's share price reaching €23 in the first three weeks of 2021 (it's currently €9).
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