Thursday, 08 December 2011
Britain's most influential shareholder group has warned City firms that its highest-paid executives must moderate their excessive bonuses to suit "current market circumstances", which if heeded could help promote recruitment of lower-level staff.
The Association of British Insurers (ABI) has sent strongly worded letters to "all UK listed banks" to highlight what it calls its "continuing concern with remuneration across the banking sector". The letter, which is signed off by ABI director, Otto Thoresen, wrote that bankers' bonuses need to be "fundamentally restructured".
"It can no longer be business as usual for this remuneration round," he wrote. "[ABI members] expect to see significantly lower bonus pools and individual awards given the current market circumstances. It is essential that all banks take - and are seen to take - a responsible approach."
The ABI represents approximately a sixth of UK shareholders, owning a total of around £1.6 trillion of funds. Its letter has been sent out to the bosses of Barclays and HSBC, and the taxpayer-backed Lloyds and Royal Bank of Scotland.
The total pot from which bankers are to be awarded their bonuses this year is expected to be around £4.2 billion. This is significantly less than the £6.7 billion of 2010 and nearly a third of the £11 billion in 2006 and 2007, but the drop is thought to be due to falling revenues in the sector, rather than the humility of the executives.