City set for surge in finance bonuses: study
LONDON (AFP) – The finance sector is set to pay out six billion pounds in bonuses this year as banks return to profit less than a year after the near collapse of the financial system, according to researchers.
The Centre for Economics and Business Research (CEBR) predicted a 50 percent leap in bonuses compared to January, from four billion to six billion pounds.
“Banks profits have risen very sharply this year, reflecting a lack of competition in the market,” said CEBR chief executive Douglas McWilliams.
“It is not surprising that the increase in bonuses has matched these higher levels of profitability.”
The CEBR said however that it would still be at least five years before bonuses in the financial sector return to their levels before the crisis erupted last year. It said 10.2 billion pounds were paid out in 2007.
The US banking industry posted landmark profits last week, prompting concern that banks will return to paying staff huge bonuses, a practice blamed for encouraging excessive risk-taking that exacerbated the global downturn.
G20pledged in September to end “practices that lead to excessive risk-taking”.
But McWilliams said any attempt to curb bonuses was “likely to be either unsuccessful or very damaging” unless it addressed the lack of competition that followed the collapse or merging of several banks due to the global crisis.
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