Sunday, February 26, 2012

European bank's bonus cuts hide salary hikes

(Reuters) - European banks could face more pressure from regulators and politicians worried that big cuts in bonuses have barely dented a high-pay culture sustained by massive hikes in base salaries.

A string of banks have grabbed headlines with big reductions in handouts to staff for 2011. Royal Bank of Scotland (RBS.L), 82 percent state-owned after a government bailout, is to cut its bonus payouts for 2011 by 58 percent.

French bank Credit Agricole (CAGR.PA) will lower trader bonuses by 20 percent and larger rivals BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA) have pledged cuts of 50 percent.

It said although RBS made a loss in 2011, this reflected the business environment and costs from its legacy business.

UKFI said RBS management had made progress in improving performance and had "exercised reasonable judgment" in its approach to bonuses.

But critics say slicing away chunks of bonus pots by banks masks concerns that base salaries and total pay remain too high. Read More