Big banks in general are not really taking great strides forward – and yet, top earners don’t have much to worry about in terms of salary cuts. One CEO has now decided to take action.
The chief executive officer in questions has already done away with 3,000 jobs at his company and the investment banking business wasn’t spared either. But now, he’s taken a step that is rather unusual: the half-year report of his company showed that the bonus pool was reduced by almost a quarter.
This manager isn’t Sergio Ermotti or Tidjane Thiam, but James Staley, the hands-on American in charge of Barclays bank. With his target of 9 percent return on equity increasingly in doubt, Staley took a decision to tackle something that most others haven’t yet dared to approach – the level of wages, which in this industry is still way beyond what others can expect to receive (the «Financial Times» reported, behind paywall).
Pay for Talent
The question is of course whether the Swiss banks are now tempted to follow his lead. The salaries are the biggest cost component in the industry and with banks struggling to boost profitability, the temptation must be there to do something about the level of compensation. So far, the biggest earners have been spared because banks argue that they have to pay top salaries to attract the best talents.
The Swiss are no exception: UBS Chief Ermotti received a total compensation of 14.1 million Swiss francs ($14.4 million) in 2018, slightly less than a year earlier. But he received 11.9 million up front, as much as never before. His counterpart at Credit Suisse earned 12.7 million, about a third more than in 2017. His bonus was 50 percent higher.
Staley once was chief of the investment bank at J.P. Morgan and also signed off on the UBS wages as member of its board. Will his action become an example for others to follow?
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