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New data shows that the EU’s specialist investment company bonus was exempt from Bloc’s bonus cap rule three years ago, shooting after increasing the variable salaries of many top traders to over 1 million euros.
European Banking Authority, the EU banking regulator, said the average bonus for key staff in EU investment groups is engaged in ownership trading, underwriting or placement activities. It said it was 1.5 million euros in 2022 and 1.15 million euros in 2023, which is more than six times the fixed wage.
This is a big jump from 2021 when bonuses at EU investment companies were capped at a fixed salary of double, unless shareholders give this approval to increase to a fixed salary of three times.
The EBA also released the first data on gender pay gaps among staff at regulated companies. In 2023, the company found that women on average were 24.5% less than men and 32% less than men at investment companies.
The data “supposes concerns about the application of the obligation to ensure equal opportunities for staff,” the EBA said, urging businesses and regulators to analyze and do more to address the causes of gender pay gaps.
The EU figures are similar to those recently issued by the UK Bank, which showed an average gender pay gap of 26% in 2023, according to a survey on the Ethical Consumer website.
Citigroup said in 2021 that the median wages for female employees worldwide are 26% lower than their male colleagues, but there is less data available.
The EBA said the gender pay gap in EU banks was “mainly caused by an underestimation of women in positions with higher pay.” Women are slightly more than half of all jobs at EU banks, but only a third of the quarter of the highest-paid jobs. It turns out that in EU investment companies, women have 35% of all jobs, but only 13% of the highest paying jobs.
EBA collected payroll data from 58 investment companies, including radio frequency traders, brokers and hedge funds. These groups were exempt from the EU bonus cap in 2022 after Brussels changed rules in response to lobbying by the sector.
Despite jumps in some specialized trading companies, regulators have found that the overall bonuses for investment companies are below the cap. It was 47% of the fixed salary in 2023, down from 81% in 2022.
The investment company was lobbying Brussels to exempt them from the bonus cap as capital requirements were partially calculated based on fixed costs. They were also afraid to be at a disadvantage compared to their British rivals.
On Tuesday, the EBA released individual data for deposit-supply banks subject to the bonus cap rule. The overall bonuses for key staff remain relatively stable, indicating a slightly lower average fixed pay average.
The best bonus was paid in the investment banking sector, where it averaged 342,773 euros, followed by an average of 126,843 euros in the asset management squad. The retail banking bonus averaged 102,908 euros.
In total, 131 EU banks investigated by regulators paid 2.2 million staff in 2023 a bonus of 18.6 billion euros and 116.2 billion euros on fixed salaries.
