UK bank bonuses set to increase by 50%

While numerous banks in the UK have agreed to abide by tighter controls on remuneration, bonuses for financial services staff look set to increase significantly in 2009.

The Centre for Economics and Business Research (CEBR) predicts that City bonuses will rise by an average of 50% this year, up from £4 billion in 2008 to £6 billion in 2009.

Douglas McWilliams, CEO at CEBR, said this could be attributed to the fact that the banks that have survived the crisis have less competition.
 
“Banks’ profits have risen very sharply this year, reflecting a lack of competition in the market. It is not surprising that the increase in bonuses has matched these higher levels of profitability,” he said.

Banking giant Goldman Sachs recently announced plans to reward its staff with a record £13.3 billion in pay and bonuses, after profits almost quadrupled in the last quarter. This translates into an average bonus of £500,000 per employee.

While the news has sparked public outrage, as it comes so soon after the government used taxpayers’ money to support ailing financial institutions, members of the industry have argued that bonuses safeguard banking and finance jobs by keeping the UK banking industry competitive.