Lunchtime Links: UK investment banks have already cut compensation ratios significantly; try telling the Bank of England

Between 2007 and 2009, RBS cut compensation as a percentage of revenues in its markets division from 43% to 26%. Barclays Capital cut from 47% to 38%. And HSBC's investment banking operations cut from 36% to 21%.

Despite this, the Bank of England's latest Financial Stability Report claims that banks have actually increased the percentage of revenues attributed to compensation since the crisis.

The graphs below make its point.

Source: Financial Stability Report

With UK banks apparently spending more and more of their money on compensation, the Bank makes the point that 10bn less on pay will lead to an additional 50bn in lending to small businesses. It's therefore calling on banks to cut comp ratios back to 'pre-crisis levels.'

This is predictably being interpreted as a call to cut bonuses further. However, the reality is that - as a percentage of revenues - bonuses have already been cut. Even compared to 2006 (when the percentage of revenues spent on compensation at RBS and BarCap was 29% and 49% respectively), last year's comp ratios were low.

Any increase in compensation in 2009 must therefore have come from non-investment banking divisions. Cutting pay for cashiers doesn't sound as appealing though.

UK banks have greater refinancing needs over the next two years than lenders based in the US, Germany, France or Italy. (Financial Times)

Here''s how banks like Citigroup increased their profit 71 times between 2000 and 2006. (Wall Street Journal)

US banks and funds to face $19bn levy. (Financial Times)

Basel III is being toned down. (Financial Times)

Non EU bankers may still be able to work in the City after all. (Financial Times)

Credit Suisse has increased Asia Pac investment bankers by 35% since December. (Wall Street Journal)

China plans to introduce credit derivatives. (Bloomberg)

Shanghai will be a regional, rather than an international, financial centre. (BusinessWeek)

Hector Sants is staying at FSA out of 'public duty.' (Guardian)

Andrew Hall's new hedge fund isn't doing too well. (Wall Street Journal)

Pierre Henri Flamand has hired someone else for his hedge fund. (Financial News)

Arguments on Deutsche's NY trading floor over one trader's alleged affair with other trader's wife. (NY Post)

Between 2007 and 2009, the percentage of Harvard undergraduates going into finance fell from 47% to 20%. (Wall Street Oasis)

BA is recruiting new cabin staff. (Guardian)