BNP Paribas Cut 2020 Bonus Pool After ECB Pushed for Moderation

BNP Paribas SA shrank the 2020 bonus pool after the European Central Bank objected to its original plans, making it at least the second large lender in the region to be forced to adjust staff payouts.

The regulator asked the French bank to reduce the overall amount awarded to employees, leaving it to decide on individual situations, people familiar with the matter said, asking not to be named because the policy is private. They didn’t specify by how much payouts will decline.

In 2019, BNP awarded 480 million euros ($572 million) in variable pay for employees whose activities have a material impact on the group’s performance - including 226 million euros in cash. Les Echos reported earlier this month that the pool for 2020 would be reduced by 5%. The bank has not formally released figures. Spokespeople for BNP and the ECB declined to comment.

BNP joins Deutsche Bank AG in receiving specific pushback from Europe’s top banking regulator, with the German lender scaling back the size of its bonus pool after the ECB balked at plans to increase it by more than a third. Amid the economic collapse brought on by the pandemic, the central bank has publicly urged “extreme moderation” on bonuses, even as some traders have reaped windfall gains in a year of turbulent markets.

BNP posted broadly stable revenues in 2020, though its net income excluding exceptional items slid about 19% under the effect of the crisis. The investment bank managed to record a strong year, with revenues up about 14%, driven by a 22% jump in its global markets unit’s revenues.

French rival Societe Generale SA, which recorded its first losing year in more than three decades, cut its company-wide bonus pool by 15%. In Italy, the regulator’s stance has also contributed to lower payouts. UniCredit SpA said earlier this month that its bonus pool for top managers would decline by almost half, in line with the ECB’s broad request.

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