Decision to ring-fence retail operations of banks could add to remuneration costs
Chancellor George Osborne’s decision to back proposals to ring fence banks' retail divisions will undoubtedly have an impact on pay, says Jon Terry, reward partner at PwC.
"With less access to capital, the opportunity for returns will arguably be diminished and so therefore the pay pot,” he said. “There's also the question of whether senior executives' rewards will be based on the business as a whole.”
Terry warned: "At the same time, compensation costs could rise if banks need to increase headcount for functions which were previously run jointly. Additional compensation costs through increased headcount are the last thing banks need.”
In the Chancellor’s annual Mansion House speech in the City of London on 15 June 2011, Osborne will say banks must be set up so that their high street branches and savings and loans would not be damaged if their trading arms ran into trouble.
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