Fall in bonuses could prompt thousands of job searches in City

Thousands of City staff are set to defect to rival investment banks in January in protest at shrinking bonuses, a leading recruitment consultant warned . About 48% of staff working in front, middle and back-office functions across the City said that they would consider changing jobs if their bonus expectations were not met, according to a survey which also found those same workers had unrealistic bonus expectations. The survey, conducted by Astbury Marsden and involving 1,122 workers, showed that 45% of City staff expect their bonus to be higher this year, despite a total payout pool that is forecast to be lower than the £7.3bn given out last year. Jonathan Nicholson, managing director of Astbury Marsden, said: "Financial services employers could see unprecedented levels of staff attrition come the new year, when bonuses fail to match staff expectations. "Disappointment is almost inevitable. Mass dissatisfaction over bonuses could be the spark that ignites thousands of job searches in January." Nicholson also disclosed that the average City worker has seen a 17% rise in their basic salary this year, while most workers outside the banking industry have received small increases at best. For the highest-earning investment bankers, the pay rises have been more substantial still, with HSBC planning to double the basic salaries of hundreds of its top staff across the world. The growth in base pay is intended to make up for the expected decline in bonuses as banks look to sidestep new guidelines that limit how much of the bonus that can be paid up front and the proportion that can be paid in cash. Bankers appeared to have overlooked their hefty salary increases, Nicholson said, in part because some already had itchy feet after putting off their next career move until after the recession and their next bonus payment. Bonuses in investment banking could be down by as much as a fifth on last year, but 87% of investment bankers are expecting a larger bonus, Nicholson said. According to Astbury Marsden, the average investment banking bonus is expected to be 72% of the base salary. HSBC's planned salary increase will be accompanied by a reduction in the bonus component of its senior investment bankers' total remuneration. The move was intended to address the growing opposition to large cash awards from the government, regulators and the public. The bank is continuing a trend started by UBS, which last year significantly raised the salaries of senior investment bankers and sharply reduced their bonuses. The Swiss bank was followed by Barclays, which handed big pay rises to investment bankers at its Barclays Capital division at the end of last year. The average base pay for back, middle and front-office City vice-presidents is £97,500, a 20% jump on a year ago, with some earning more than £160,000, according to Astbury Marsden, and top bankers earning far more still. The average pay at assistant vice-president level has risen by 12% to £70,280 in the past twelve months.