4 Min Read
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Dominic Elliott
LONDON, July 16 (Reuters Breakingviews) - Pay numbers released by the European Banking Authority on July 15 will do nothing to boost the City of London’s popularity in the rest of Europe. The UK was home to 84 percent of the pool of happy EU investment bankers who earned over 1 million euros in 2011, up from 79 percent the year before. The imbalance underscores London's financial dominance in the region.
To an extent, the numbers match the business reality: relative to the size of its economy, the UK takes a disproportionate share of investment banking fees in Europe. By contrast, continental European banks like Deutsche Bank (DBKGn.DE) and BNP Paribas (BNPP.PA) pride themselves on the ability of their universal banking models to provide domestic clients with a one-stop shop. When staff in retail banking, asset management and operations are added in, the UK's share of 1 million euro-plus earners shrinks to 77 percent.
Yet the skewed nature of investment banking in Europe is still stark. Though it has benefited London for years, it could come back to bite the UK capital if the country's influence in the region wanes further. Even though the absolute number of UK investment banking high-rollers fell 6.5 percent to 1,809 between the ends of 2010 and 2011, other countries saw bigger declines. The number of 1 million euro earners in France fell by a massive 54 percent, to 101, between the end of 2010 and 2011. In Germany the drop was 27 percent, to 90. The net effect was that the UK increased its share of investment bankers in the 1 million euro-plus pay club.
The risk for the UK is that Brussels uses the EBA's numbers to justify measures that would chip away at London's preeminence as a financial centre, in the name of rebalancing.
True, London's critical mass shows there is still a long way to go. The City remains the undisputed financial capital of Europe. Were Britain to leave the EU, the number of resident fat cats would likely fall along with banking activity, and London wouldn’t be protected against retaliation from the continent. Another reason to remain within the single market, if uneasily so.
- More bankers in Britain earned 1 million euros ($1.3 million) in 2011 than in the rest of the European Union combined and would easily bust a planned cap on bonuses, figures from the bloc's banking regulator showed on July 15.
- Publishing figures on bank pay for the first time, the European Banking Authority (EBA) said that 2,436 bankers based in the UK pocketed 1 million euros or more in 2011.
- The EBA's proposed cap sets a basic 500,000 euro salary threshold, above which a bonus can be no higher than fixed pay, or twice fixed pay if there is shareholder approval.
- Reuters: More British bankers earn 1 mln stg than in rest of EU-study [ID:nL6N0FL2L5]
- For previous columns by the author, Reuters customers can click on [ELLIOTT/]
(Editing by Pierre Briançon and Sarah Bailey)
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