| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : US Economy Last Updated: Feb 25, 2013 - 7:21 AM


Financial crisis "little more than a blip for the pay of bankers"
By Finfacts Team
Feb 22, 2013 - 8:27 AM

Email this article
 Printer friendly page

A paper on UK bankers' pay says the financial crisis seems to have been so far "little more than a blip for the pay of bankers."

The paper, 'Bankers and their Bonuses,' [pdf], by Dr Brian Bell and Prof John Van Reenen of the Centre for Economic Performance at the London School of Economics, says: "if we focus on all those workers in the top percentile, their average wage rose from £277,800 in 2008 to £284,100 in 2011, a rise of 2.3% and their share of the overall wage bill fell, as the mean wage for all workers rose by 3.7%. In contrast, the bankers in the top percentile saw their average wage rise from £325,100 to £353,100, a gain of 8.6%."

  • The share of total UK income taken by the richest 1% of the population (one in every hundred people) has more than doubled over the past three decades - - from 6% in 1979 to 14% in 2009;
  • The share of annual earnings taken by the richest 1% rose by about two percentage  points in the decade leading up to the 2007/08 financial crisis (from 7.1 to 8.9 percentage points, a rise of about 25%). Two-thirds of this increase was solely due to  the increase in bankers’ bonuses;
  • The share of national income going to the top 1% fell after the crisis by 0.5 percentage points between 2008 and 2011;
  • But bankers’ share of total income has not declined since the financial crisis. And in terms of the risk of job loss, they have done no worse than other people, even when compared only with other groups of the most skilled employees in the economy;
  • These calculations underestimate the amount going to bankers because they focus on cash (salary and bonus). New disclosures by the Financial Services Authority reveal that for 1,408 key employees in 10 London banks, cash payments in 2010 averaged £568,000 per year, but including expected payments (in cash and equity) brought their average pay to £2m;
  • This group of bankers therefore earned £2.8bn – roughly six times more than the  combined total pay of the CEOs of every company in the FTSE 100 (£470m).

With the European Commission looking likely to set a cap on the ratio of bankers’ bonuses to their salaries, what are the right policies on high pay? The authors comment: "If bankers’ pay has a large component of economically inefficient ‘rents’, then the best approach is to improve financial regulation to stop banks earning excess profits.

"Many moves have been made to improve regulation, but it is unlikely that the risks of ‘too big to fail’ will ever be adequate regulated. In this case, some pay controls may be needed as a backstop to reduce incentives for excessively risky behaviour by bankers."

Last year, McLagan, a consultancy, in a report for the Association for Financial Markets in Europe, representing Europe’s wholesale financial markets said: "In 2011, total remuneration in aggregate across survey respondents’ banking and capital markets businesses was down 16% from 2010 and 18% from 2009. Total remuneration was down 24% from 2007, or 30% on a per capita basis. In terms of the published view, staff expense recognised in 2011 (calculated in line with international accounting standards) varied less, down 7% year-over-year and only 2% from 2009."

Performance and remuneration in investment banking - findings of an industry study by McLagan

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Related Articles
Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

US Economy
Latest Headlines
US jobs rose by 215,000 in July; Unemployment rate stable at 5.3%
US economy grew at weak pace in Q2 2015 - Worst expansion since 1945
Decoupling of per capita GDP, productivity, private employment, and median family income in America
US economy stumbles again in 2015
Income gap highest in 30 years; No inequality rise in best-paying US firms
Fed minutes raise doubts about fragility of US recovery
Senate Democrats block trade deal authority for Obama
Five firms held 25% of top US non-financial companies cash pile in 2014
US added 223,000 jobs in April; Broad jobless rate at 10.8%
Investment struggles as dividends/ share buybacks at top US firms to exceed $1tn in 2015
US economic growth plunged in Q1 2015
Why the Fed may (almost) never raise interest rates
US jobless rate falls to 5.5%; Broad rate at 11%; Participation rate at 1978 level
US added 257,000 jobs in January; Broad jobless rate at 11.3%
US economy will soon see best years in a decade
US annualised GDP slowed sharply in final quarter 2014
US budget deficit to fall to 2.6% of GDP in 2015
US added 252,000 jobs in December; Jobless rate falls to 5.6%
US adds 321,000 jobs in November; Private sector adds 10.9m jobs in 57 months of growth
US manufacturing slowed in November
US retail spending over Thanksgiving weekend fell 11%
US consumer spending weak in October; Business investment fell again
US third-quarter GDP revised up to 3.9% annualised rate
After destroying banking secrecy US helps Swiss exporters
US oil imports from OPEC cartel at 30-year low
Tax-inverted "Irish" firm Actavis agrees to buy US Botox maker Allergan
US nonfarm payroll employment rose 214,000 in October' Jobless @ 6-year low
Swiss bankers await fallout of US tax evasion acquittal
Two PMI reports give contrasting trends on US manufacturing
US GDP increased at annualised 3.5% in third quarter of 2014
US city home price growth slowed again in August; Consumer confidence rebounded in September
US new orders for manufactured durable goods fell again in September
Loans to buy US shares at record highs
Global markets slide; US industrial production best in 3 years & jobless claims in 14-year low
US federal budget deficit dips to 2.9% of GDP in fiscal year 2014
US added 248,000 jobs in September; Jobless rate falls to 5.9%
US set to become world’s leading liquid petroleum producer again
Obama issues new rules to combat tax inversions
US Securities and Exchange Commission to pay $30m award to foreign whistleblower
Typical American household income in 2013 was below the 1989 level