Reports of widespread withholding of foreign exchange bonuses at Royal Bank of Scotland, Barclays and Citi may have been overdone. The Financial Times reported earlier that FX bonuses at these banks have been broadly withheld as FX fixing allegations are investigated. But headhunters we spoke to say most FX professionals at these banks have had their bonuses announced or paid as usual.
"I've spoken to people across trading, structuring and sales," said Christian Robbins at search firm Cherry Bull. "They've definitely been paid. This seems to be limited to a small number of people."
FX bonuses across the board were down by an average of 15% for 2013 vs. 2012, according to the head of a rival FX search firm who asked to be named. At some banks, he said they were down even more. At RBS, another headhunter speaking on condition of anonymity, said the allocation of FX bonuses was particularly erratic: "Some people there were very, very upset. But others have pulled out of interviews because they were so happy with what they received. There is a very distinct line between the people RBS is trying to keep happy and those it's decided are not core."
Citi declined to comment on allegations that bonuses had been withheld. RBS awards are put on hold during investigations. Barclays didn't immediately return our call.
RBS isn't due to pay the first installment of its bonuses until June. However, the bank announced its numbers at the end of last week. As per the FT's report, some of its traders are indeed having their bonuses withheld while the bank investigates accusations of fixing. Worse, say headhunters, these people haven't even been told how much they are due to get paid if cleared of any involvement in the matter. "They're livid, absolutely livid," says one, "They're being treated as guilty until proven innocent and because the bonus number hasn't been communicated, there's a feeling that the bank could cut it at any time."
Jane Mann, head of employment law at London law firm Fox Williams, says there's not much individual traders can do in these circumstances: "Most banks bonus schemes will give them the discretion to defer bonuses if they are properly investigating wrongdoing. "
The traders affected will be locked into their jobs while the bank investigates. Robbins says there aren't many other roles to go to in the FX market now anyway: "Most banks aren't hiring externally - they're in 'wait and see mode' and are filling gaps on desks with people who they've promoted internally."
Upset as FX bonuses widely withheld. Banks may be incentivized to hire under 25s
10 things you need to know about banks’ performance in the first quarter, by Morgan Stanley
Barclays loses head of FICC research and chief European economist