City bonuses totalled £14bn last year

• Figures down on £19bn paid out in 2007 • Average finance bonus of £12,500 disguises huge disparities • Base salaries rise for high-earners in City City bonuses were kept in check last year as banks and insurance companies restricted the total to £14bn, according to analysis by the Office for National Statistics. The figure reveals a dramatic fall in payments to financial sector staff since the height of the banking boom in 2007 when £19bn was paid out in bonuses, though it marks a recovery from 2008 when the figure was £12bn. Overall, £35bn was paid out in bonuses to staff across the whole economy, unchanged on the year before. The latest figure is expected to cheer Tory and Liberal Democrat politicians who have called for pay restraint in the City to help overcome public anger at the part played by bonus incentives in the banking crash. George Osborne has emphasised the need for bankers to accept lower bonuses to help restore trust in the sector. However, the average £12,500 annual bonus paid to finance staff in the year to April is likely to disguise huge disparities in the amounts paid to senior investment bankers compared with retail banking staff outside London and the south-east. Earlier this year Barclays revealed that its new chief executive Bob Diamond got a bonus of £6.5m for 2010 on top of his £250,000 annual salary. According to the bank’s remuneration report he was awarded the sum for his performance as head of Barclays’ investment banking and wealth management operations. A trend to pay higher salaries also offsets the effect of lower bonus payments in City institutions, according to a report by recruitment firm Kennedy Associates. In a recent report it found an average investment bank managing director received £300,000 to £400,000 in base salary as opposed to £175,000 four years ago, at the peak of the market. The average paid to finance staff also contrasts with the average public sector annual bonus of £180. Public sector employees, who make up 22% of the workforce, accounted for 1.5% of the £35bn bonus payments across the economy. TUC general secretary Brendan Barber said City bonuses were still too high. “The chancellor’s austerity message has failed to reach the City, where a small clique of super-rich bankers has grabbed 40% of all bonuses paid out in the UK. “City bonuses are still far too high and the incentives for risky and damaging decisions far too great, especially when bankers know that taxpayers will have to pick up the tab.” Bonuses have played an increasing role in the incomes of ordinary private sector workers after a 58% rise in payments since 2000. Most payments will be related to individual, team or company performance. Executive pay and bonuses Banking Financial sector Phillip Inman guardian.co.uk

Posted by on July 19, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.