U.K. Bankers' Bonus Pool Stagnates In Past Decade, Law Firm Says

(Bloomberg) -- Bonuses for bankers may be back at their pre-crisis highs in the U.S. but, across the Atlantic, they’re still stuck where they were after the collapse of Lehman Brothers -- and they’re shrinking, according to a study by law firm Linklaters.

Discretionary awards in the U.K. for 2017 amounted to $19.6 billion, little changed from 2008, Linklaters said. They’ve fallen 9 percent over the past three years, when a European Union rule limiting bonuses to twice the level of fixed pay came into force, the law firm said.

By contrast, the bonus pool for U.S. banks stood at $31.4 billion for 2017, the largest since 2007 and up by 78 percent from the year the crisis reached its peak. That followed a vintage year for U.S. markets, which performed strongly after the election of Donald Trump as president at the end of 2016.

“It’s no secret that U.S. bankers have historically been paid larger bonuses than their European counterparts,” said Alexandra Beidas, employment and incentives partner at Linklaters. “But it’s a bitter pill to swallow when you can see that some regulators are being quite tough on financial institutions and others less so.”

European traders faced some of the leanest bonuses in years in 2017, something that also reflected lower levels of profitability at British and continental European investment banks.

British lenders and their regulators have been united in their hostility toward the bonus cap. Last year, Bank of England Governor Mark Carney indicated the U.K. will review a cap on banker bonuses after Britain leaves the European Union.

“It seems that the U.K.’s financial sector really has ended up with the toughest rules anywhere in the world,” said Beidas.

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