Late Lunchtime Links: Barclays, RBS and Lloyds will all cap bankers' bonuses this year. It doesn't matter
It's happened before and unfortunately it seems that it will happen again: British investment banks will be allegedly be imposing a ceiling on their cash bonuses for 2012. Fox News reported yesterday that RBS, Lloyds and HSBC are all going to restrict the amount of cash they pay this year. For RBS and Lloyds, this will be the fourth year that such a cap has been imposed. For Barclays, it will be the second - last year, BarCap restricted cash bonuses to just £65k.
Superficially, this looks like terrible news both for people working at those banks and for those banks' ability to retain staff. BarCap looks particularly exposed: its US investment bankers were said to have been very peeved about last year's cap, which was far lower than the £173k cap at Credit Suisse or the £168k cap at Deutsche Bank
Less superficially, the cash bonus caps may be no big deal. British banks have a history of capping cash bonuses for PR purposes and then sneakily paying people in a highly fungible form that can be exchanged for cash only a few months later. RBS, for example, capped cash bonuses at just £2k last year and is expected to cap them again at £2k this year. However, RBS commonly pays a tiny amount of its bonuses in the form of cash and a large amount of its bonuses in the form of bonds which can be sold just four months later. Last year's RBS remuneration report revealed, for example, that 75% of its deferred bonuses were actually deferred only to a date in 2012. So maybe cash caps aren't such a big deal after all.
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