A worker walks past office skyscrapers in the City of London financial district on January 25, 2018.Toby Melville/Reuters
Financiers in Europe earning more than €1-million (C$1.56- million) rose by a third in the six years to 2016 to 4,597, with investment bankers and London dominant, data showed on Tuesday.
A European Banking Authority study showed how pay has rebounded in banking, whose spectacular crash ten years ago triggered state bailouts and has depressed profitability since.
While most of Europe’s high earners each made between €1- and €2-million in 2016, the EBA research found that over 500 had been paid more than this, while around a dozen received at least 13 million euros each.
One executive in asset management topped the table, earning a €30-million bonus, taking home total pay of more than €33-million.
The payouts are sometimes at the expense of shareholders in Europe’s banks, the EBA said, pointing to low dividends.
New rules to curb bonuses, introduced after the financial crisis, mean such windfalls account for a smaller part of pay than in the past, but overall top earners are thriving.
They represent an elite among the roughly 2.8 million bank staff across the European Union.
Although the EBA study found that the number of million-euro-plus pay packets fell between 2015 and 2016, this was largely as a result of a drop in the value of the pound after Britain’s vote to leave the European Union in June 2016.
Because most of the big earners are based in London, this skewed the data when compiled in euros but in the long run, the number of high earners rose from less than 3,500 in 2010 to 4,597 in 2016, the EBA said.
More than half of the million-euro-plus a year earners are classed as investment bankers by the EBA, while a smaller number fall under categories such as management or retail banking.
CONTINENTAL DRIFT
The EBA’s findings, which take a snapshot before the full impact of Britain’s Brexit vote was felt across the industry, highlight the stark difference in the number of high earners between Britain and the rest of Europe.
More than three quarters of the bankers paid over €1-million are based in London, which is Europe’s dominant financial hub and also one of its most expensive cities.
Germany and France are among the European countries trying to win business from Britain as it prepares for new trading arrangements after Brexit, with Frankfurt and Paris vying for jobs and operations which are being moved out of London.
The EBA data showed the gulf between them. In 2016 Germany had just 253 bankers who earned more than one million euros and Paris had roughly 200, while London counted more than 3,500.
Experts at Helaba bank estimate that Germany’s financial center Frankfurt is less than one fifth the size of London.
The EBA also found some top bankers were given substantial payouts when they were sacked by their employers, with three getting severance payments of up to €14.7-million euros.
“The high number of big banking salaries is bad news for public trust in finance,” Benoit Lallemand of Finance Watch, a Brussels-based group that campaigns for tighter control of banking, said in response to the latest data.
“We are not seeing good news for the economy ten years after the crisis that would justify this.”