NatWest paid nearly £30million in bonuses to some of its top trading staff last year, despite a loss at its investment bank, as UK lenders are expected to follow Wall Street and its European rivals with big salary increases.
The UK lender has increased its overall bonus pool by 44% to £298m in 2021, following rival Standard Chartered which unveiled a 38% increase in variable pay to $1.4m for its staff on February 17.
NatWest made an operating profit of £4bn last year, compared to a loss of £351m in 2020.
With bonuses rising across the group, the bank paid £27.7million to 94 so-called “material risk takers” working at NatWest Markets, its investment bank, last year.
This equates to an average bonus of £295,000, but these key employees – who influence the risk profile of the bank as a whole – are required to defer a large part of their variable pay.
NatWest also paid £57.7m in salaries to 128 MRTs from its investment bank.
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NatWest, formerly known as Royal Bank of Scotland, has continued to shrink its once sprawling investment banking unit after being bailed out by the UK government at the height of the 2008 financial crisis, and is now focusing on the trading in fixed income securities and certain capitals. markets businesses.
As Wall Street and European rivals including Goldman Sachs, JPMorgan and Deutsche Bank unveiled record results for their investment banks as M&A deals exploded, NatWest suffered a £711m loss sterling in its markets unit, as trading revenue fell and it continued to make unit cuts.
That compared to a loss of £227m in 2020.
The bonuses offered to senior executives at NatWest Markets still pale in comparison to some rivals on Wall Street, which paid more to staff than at any time since the boom years before the 2008 crisis.
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Goldman Sachs increased its bonus pool for traders by 50% last year, as well as special rewards for senior employees worth millions of dollars. JPMorgan also increased its investment banking bonus pool from 40% to 50%.
Credit Suisse has cut its bonus pool by 32% after being hit by successive crises in 2021, including a $5.5 billion hit to its exposure to collapsed family office Archegos Capital. But he also unveiled a special bonus for senior executives that included a one-time equity award and a larger proportion of the overall cash payout, which must be repaid if employees leave.
However, senior NatWest Markets employees received significantly higher bonuses than their colleagues elsewhere in the bank. The largest number of MRTs – 329 – worked in corporate roles and received an average bonus of £68,400.
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