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What is pay really like at the Europeans?

Salaries and bonuses for risk takers at European banks

Each year, banks identify and report salary data on their material risk takers (MRTs). As defined by the FCA, these are staff members “whose professional activities have a material impact on the risk profile of the firm or of the assets that the firm manages.” They tend to be leaders, deal makers or traders significantly responsible for both risk and revenue generation.  

Previously, eFinancialCareers reported on the salaries of material risk takers at bulge bracket banks in London. Now, we’ve pulled the data for significant banks operating in Europe and the below table shows the total, fixed and variable compensation of those individuals. Where available, we’ve shown data specific to investment banking employees, although some firms do not disaggregate their MRTs. The “scope” column indicates where the numbers are for all MRTs or employees in the investment banking division.  

* Key Risk Takers, as defined by UBS, includes all employees with a total compensation exceeding USD / CHF 2.5 million. ** Due to some MRTs not receiving variable remuneration (i.e. board members) the number of employees used to calculate the average fixed and variable compensation will differ.

Looking at the data at a more granular level, we’ve broken out the average cash vs. stock variable compensation for the MRTs and detailed any severance and sign-on bonuses that employees received.  

One of the most interesting pieces of information we found when trawling through the reports was Deutsche Bank’s deferred compensation schedule (see screenshot below). It appears that employees face a 13-year clawback and receive the first 10% of their bonus compensation five years after the award is made. Per their compensation report, "Deutsche Bank continues to apply deferral structures that go beyond the regulatory minimum, resulting in an overall deferral rate (all employees including non-MRT population) of 48 % in 2021. For the MRT population only, the deferral rate amounts to 92 %." That makes their $2mn+ average total compensation in the investment banking division look less attractive, especially given the state of inflation.   

 

Source: Deutsche Bank

The other useful data point that comes up is the regulatory requirement to report employees earning over one million Euros per annum. A clear divide emerges between the bulge backet or international banks (UBS, Deutsche, Barclays, HSBC) and the regional operators (UniCredit, Credit Mutuel, Credit Agricole, ABN Amro) where 1mn+ Euro salaries are significantly less common.   

*Standard Chartered do not follow the standard reporting format above 5mn. They had 2 employees earning 5-5.5mn, 1 employee earning 8-8.5mn, 1 employee earning 8.5-9mn and one employee earning 10-10.5mn. 

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AUTHORNathan Risser Editor
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  • Yu
    Yunus
    30 July 2022

    I am a bit confused. Aren't banks only performing role of market makers now? Are traders considered market makers for having assets in their book for one day? I suppose traders have to move assets/close position before end of day, right?

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