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London finance bonuses to halve again in 2012
May 10, 2012 / 6:16 AM / 6 years ago

London finance bonuses to halve again in 2012

LONDON (Reuters) - Bonuses for London’s financial workers will be almost halved this year, falling to their lowest level in over a decade and nearly 10 billion pounds below a peak in 2007, according to a study.

<p>Steve Palmer, an insurance credit controller, displays his red rose and tie to celebrate St George's day in the City of London April 23, 2012. The Rose is the national flower of England. REUTERS/Kevin Coombs</p>

City of London bonuses will slump to 2.3 billion pounds, down from 4.4 billion pounds in the 2011/12 period as revenues are hit by euro zone worries and as a backlash over bankers pay grows, the Centre for Economics and Business Research said.

Banks traditionally pay bonuses in the new year, rather than during the period they were earned.

City bonuses have been a big source of contention in Britain since the taxpayer-backed bank bailouts of the 2008 financial crisis.

A political furore earlier this year forced the chief executive of government-controlled Royal Bank of Scotland (RBS.L) to waive his award of almost a million pounds.

While most banks did cut bonuses in 2011 from a year earlier, mainly as revenues shrank, shareholders angered at paltry returns have upped the pressure on pay, with more than a quarter of voters at Barclays (BARC.L) rejecting its remuneration plan.

But bonuses are also politically sensitive because a slump in rewards signals a much lower tax take for a UK government bent on cutting the country’s deficit.

City bonuses will be hitting levels this year not seen since 1998, when they came in at 2.5 billion pounds.

“The biggest loser of all will be the Treasury, meaning fewer funds available to finance public services,” said Douglas McWilliams, Chief Executive of the CEBR.

He added that a slack labour market and a collapse in City activity now meant that large bonuses were “the exception, not the rule.”

The CEBR predicted earlier this week that jobs in the City of London would fall to their lowest level in 16 years, with 25,000 more layoffs due in 2012.

Reporting by Sarah White; Editing by Elaine Hardcastle

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