Banker Bonuses: 71% Expect Immediate Cash Rewards Despite EU Caps and Deferrals

Around 71% of bankers in the UK, US, and Singapore expect a bonus for 2014, while 56% of those financiers expect an increase in rewards from their employer.

According to the eFinancialCareers Bonus Expectations Survey, which was conducted this October, bankers are more confident about receiving an extra pay reward, compared to last year when 61% expected to receive a bonus.

"It's been a strong year for M&A and equity capital markets this year, and although it hasn't been great in fixed income trading, it's certainly been an improvement on last year when most banks saw big drops in their revenues," said James Bennett, managing director of eFinancialCareers.

"Combined with a perception that the global economy was improving, this has created more optimism. Bankers expect that banks will be prepared to reward them a bit more generously for their work in 2014 and want to retain them for an anticipated upturn in 2015.

"However, the recent big stock market falls suggest things aren't quite as clear-cut as had been assumed. There's the potential for bankers' hopes to be disappointed if the market turbulence continues and economic growth stalls."

The survey polled 587 professionals working in banking and finance in the UK, 978 in the US and 696 in Singapore.

Amongst those who expect a bigger bonus, a third anticipate a bonus increase of between 11% and 30% while 19% bargain for a raise of between 31% and 50%.

Unsurprisingly, most bankers cited personal performance for the main reason they will receive a bonus increase.

The EU Council pushed through the plan earlier this year to cap bankers' bonuses at a maximum of double their salary from 2015. The measure will come in on 2014's bonuses that will be paid out at the start of 2015.

However, under draft guidelines produced by the European Banking Authority (EBA), lawmakers are debating whether to permit a bonus cap of 250% of bankers' salaries.

It also appears that bankers' pay rules could be relaxed to allow deferred payments over five years.

Despite these changes, the capping is still meeting opposition.

eFinancialCareers' survey questioned respondents about framework surrounding bonus structures, including deferral and clawback policies. Seventy percent said they do not expect any of their bonus to be deferred, while 71% believe their bonus will be immediately available as a cash payment.