19 Jan 2016

AFME Review of the Reward Environment in the Banking Industry

This report focuses on the key trends in remuneration in banking and capital markets (BCM) activity in 2014 and provides 2015 estimates where available, based on a detailed study conducted by McLagan. For the analysis McLagan used data from
18 of the AFME Board-members firms, which have a combined 2014 BCM revenue of €148bn (from published accounts) and make up 87% of the 2014 BCM revenue of all AFME Board-members firms.

This study aims to give insight into how the following have changed in the period since the financial crisis:

  • Size of total compensation and bonus pool, and the total compensation and bonus pool per capita.
  • How remuneration is structured between various pay elements – share of allowances; make up of bonus; variable to fixed ratio.
  • A clear understanding of how the nature of that variable remuneration has changed in recent years in response to regulation. For example, the size of deferral, how long remuneration is deferred for and the change in upfront cash bonuses.
  • The global context – how does total and variable remuneration compare, in other financial centers across the world and other industries?
  • The relationship of remuneration with bank performance – looking at compensation to income ratio.