Banks warn pay curbs will hit UK competitiveness

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The Independent Online

The City was again voicing complaints yesterday about the pay restrictions on some of Britain's wealthiest bankers.

The City HR Association and PA Consulting Group warned that London's financial companies believe the Financial Services Authority's Remuneration Code would "make it more difficult to attract and retain talent in London" and reduce competitiveness as a result.

The complaints over pay come despite the accountants KPMG preparing to warn that investment banks have put in a "disappointing" performance on both sides of the Atlantic.

KPMG's UK Banks Performance Benchmarking Report will say that UK banks' combined profits have halved in 2011 compared with 2010 and note the outlook is very challenging.

The FSA's code will force banks to defer much of the pay of senior managers and those performing functions entailing "significant risk" such as star traders.

It has been designed to discourage staff at financial firms from taking dangerous risks, thus helping prevent a repeat of the financial crisis.

But according to the PA Consulting/City HR Association Report, which surveyed senior executives from 50 UK and international banks, 52 per cent of respondents feel the code will make it more difficult to attract talent into London and 58 per cent warn that the code will make it easier to attract talent away from the City. As a result 82 per cent of decision makers at banking institutions say that the code risks weakening UK competitiveness.