No big bonuses for bankers this year: HR experts

No big bonuses for bankers this year: HR experts
By Jo-ann Huang | Posted: 07 February 2011 1917 hrs

SINGAPORE: Banks and brokerage firms may be bouncing back from hard times, but their bonus payouts will remain flat for this year.

This is according to human resource experts, who said that bonuses in the financial sector are still under public scrutiny.

During the recent financial crisis, some financial institutions in the US and Europe drew controversy for their large bonus payouts, despite taking bailouts from their respective monetary authorities.

Wall Street bank Goldman Sachs said it would pay US$11 billion in bonuses in late 2008, despite receiving a lifeline US$9.9 billion from the US government.

Financial institutions are also increasing their base salaries, to balance out the thinner bonuses, said human resource experts.

This bonus season, even the top performing financial workers can forget about a thicker payout, compared to that of last year.

Those who have put in an average or poor performance might see their bonuses halved.

This is despite a strong rebound in the financial sector after a heavy beatdown during the recent financial crisis.

Robert Walters associate director (Financial Services & Legal) Neil Dyball said: "I think that the banking industry had a very good year last year -- there was lots of growth, additional hires so the costs base went up quickly.

"I think the revenues tailed off in the second half of the year, and therefore banks did not meet some of their expectations or budgets they thought they may do.

"We expect people within the front office this year to have a reasonable year, but that will be a flat bonus compared to last year or a slight increase.

"Those in the middle and the back office probably would see a slide backwards and therefore the high performers will receive their bonus accordingly, and the low or average performers would receive a lesser bonus than what they would have received in the past".

Financial institutions typically have a performance-based bonus policy, on top of their base salaries.

According to human resource experts, financial workers in the middle or back office usually receive a three-to-six month performance bonus, while front office staff receive a percentage of their base salary as a bonus.

Staff at American or European banks are also likely to see limited bonuses, due to wage restrictions from authorities.

Ambition Singapore managing director Paul Endacott said: "There's a lot of scrutiny around bonuses right now. There's a lot of scrutiny around pay generally within the banks.

"There's a concern from the banks that if they restrict the bonuses that they can pay, they may actually lose talent and find that people will go to other banks that pay higher bonuses.

To help retain staff, some banks are increasing base salaries by 10 to 15 per cent.

But workers from other sectors may see only a marginal salary increase this year.

Mr Endacott said: "For the talented employees, the employees that people want to keep, then you might find that some of them might get increments of six, eight, or 10 per cent.

"But they would be the exception rather than the rule. But for the average employee it would be about four to six per cent".

Experts said the four to six per cent salary increment this year should help ease inflation worries.

The Monetary Authority of Singapore said last month that inflation should remain high, going forward.

Inflation in December last year hit a two-year high of 4.6 per cent.

-CNA/wk

- wong chee tat :)