Warning about higher base salaries

Regulations surrounding bankers' pay, particularly the EU bonus cap, have lead to fixed salaries representing a higher proportion of total pay packets, meaning financial institutions are less capable of reacting to a downturn, the Bank of England has warned.

City AM reports that in its fourth quarterly bulletin for 2015, the Bank of England pointed out that not being able to vary workers' remuneration when business was looking bleak could have a negative impact on the resilience of the financial system as firms are restricted in the ways they can absorb losses.

The Bank highlighted that, as far as the ability to react quickly to changes in financial circumstances was concerned, higher rates of fixed salaries carried similar risks to bonuses that were awarded without appropriate incentivisation.

To access the complete City AM article hit the link below:

Bankers' bonus rules have lead to higher fixed salaries, making losses difficult to absorb in event of a downtown, warns Bank of England

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