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'HK may replace London' in 2015
Source: Agencies |
November 14, 2012, Wednesday
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Print Edition
Print Edition
BONUSES for 2012 in London's financial sector will more than halve to 1.6 billion pounds (US$2.5 billion) in total, a study has found, and some shareholders are urging banks to cut pay even more.
The handouts will keep falling until 2015, the Centre for Economics and Business Research (CEBR) said, reflecting the impact of tougher financial market conditions and public disquiet over the size of banker payouts.
Yet the impact of the squeeze on the sector goes further than bonus payments and the researchers also said employment in London's banks, brokerages and other financial sector firms --- collectively known as the City - will keep shrinking.
They said this would allow rival center, China's Hong Kong, to overtake London by size in the next three years.
Banking job cuts have hit London hard in the past three years as eurozone woes and regulation eat into firms' income, and a further slowdown in stock trading and mergers and acquisitions is expected to affect pay levels for 2012.
Payouts have also fallen after a public backlash over big bonuses, blamed for helping create the climate which led to the financial crisis which started in 2008. Shareholders upset about poor returns are becoming more demanding, too.
Shareholder activist group Hermes Equity Ownership Services has called on the industry to base bonus payouts on a performance period of three to five years, rather than annual performance, echoing earlier proposals on how payouts should be calculated.
Earlier this year several banks, including Barclays, were hit by a bigger than usual backlash from shareholders over pay when they sought approval for payout plans.
In a separate study, the CEBR also forecast that Hong Kong would overtake London as the world's biggest international financial center in 2015, as Asian markets grow.
Hong Kong employed less than half as many people in financial services than London in 2005, but job numbers in the Asian hub will have grown by almost 100,000 in the next three years.
Hong Kong has gained ground primarily because of more dynamic growth in Asian economies, the CEBR said, while the growing use of China's renminbi as a currency worldwide will also boost it as a center.
The handouts will keep falling until 2015, the Centre for Economics and Business Research (CEBR) said, reflecting the impact of tougher financial market conditions and public disquiet over the size of banker payouts.
Yet the impact of the squeeze on the sector goes further than bonus payments and the researchers also said employment in London's banks, brokerages and other financial sector firms --- collectively known as the City - will keep shrinking.
They said this would allow rival center, China's Hong Kong, to overtake London by size in the next three years.
Banking job cuts have hit London hard in the past three years as eurozone woes and regulation eat into firms' income, and a further slowdown in stock trading and mergers and acquisitions is expected to affect pay levels for 2012.
Payouts have also fallen after a public backlash over big bonuses, blamed for helping create the climate which led to the financial crisis which started in 2008. Shareholders upset about poor returns are becoming more demanding, too.
Shareholder activist group Hermes Equity Ownership Services has called on the industry to base bonus payouts on a performance period of three to five years, rather than annual performance, echoing earlier proposals on how payouts should be calculated.
Earlier this year several banks, including Barclays, were hit by a bigger than usual backlash from shareholders over pay when they sought approval for payout plans.
In a separate study, the CEBR also forecast that Hong Kong would overtake London as the world's biggest international financial center in 2015, as Asian markets grow.
Hong Kong employed less than half as many people in financial services than London in 2005, but job numbers in the Asian hub will have grown by almost 100,000 in the next three years.
Hong Kong has gained ground primarily because of more dynamic growth in Asian economies, the CEBR said, while the growing use of China's renminbi as a currency worldwide will also boost it as a center.
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