UK bankers are paid too much, says EU regulator

Some 2,436 City bankers received annual wages in excess of £870,000 in 2011, according to the European Banking Authority (EBA), as the row over excessive pay in financial services rumbles on.

The majority of bankers with the highest incomes in Europe work in the UK and their wages are three times higher than in the rest of the continent, according to an EBA report.

As the report explains, the directive 76/EC (CRDIII) requires EU member states to collect details on “the number of individuals per credit institution in pay brackets of at least €1m (£870,000), including the business area involved and the main elements of salary, bonus, long-term award and pension contribution.”

Click here to read The Guide to Sustainable Banking 2012

Of the 2,436 bankers reported by the EBA to be paid more than this threshold, 1,809 work in the investment banking sector. The figures do, however, represent a slight decline, with 2,525 overpaid bankers in 2010. The overall number in Europe was 3,175 in 2011 and 3,435 in 2010.

Labour MP Pat McFadden, from the Treasury select committee, told the Guardian that these figures were problematic in a time of austerity for a large part of the population.

“The problem with pay in banking is not just the high levels but that bonuses are paid out without risks being understood and on the basis of results that don’t look so good in the future”, he said.

In June, the parliamentary commission on banking standards suggested that the threat of prison sentence would prevent irresponsible bankers from behaving in a reckless and unsustainable way, but the Law Society later said that this was not a correct solution.

After the release of their respective annual reports in 2013, Lloyds and the Royal Bank of Scotland were both criticised by campaigners, who said their bonus packages were excessive.

Lloyds gave chief executive António Horta-Osório a bonus of over £1.4m, despite recording a £570m loss, while RBS shelled out £607m in bonuses while losing £5.17 billion in 2012. 

Further reading:

Public urged to wage ‘guerilla war’ against big banks

Jailing bankers for misconduct not the solution, says Law Society

‘Shocking and widespread malpractice’ should land bankers in jail, says commission

There was criminality in the City – but not one prosecution

The Guide to Sustainable Banking 2012