Morning Coffee: Small investment bank boosts pay by 41%, naïve bonus bankers lose court case

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When big investment banks start to curb compensation, it’s worth considering alternatives. The smaller, independent firms have had a good first half. The latest such bank to report is Canaccord Genuity, which has succeeded in hiring some senior bankers from larger rivals in recent months.

Its investment banking revenues increased by $55.5m year on year, or a rather ridiculous 174.5%. Much of this can be pinned on a 162% rise in its home country of Canada, but its UK and US operations also to at least double revenues.

Even in these circumstances, its share price tumbled as it missed analyst estimates and profits slipped on the previous quarter. In such circumstances, you might think it was being prudent with pay – but it’s not really. While salaries have remained largely flat, it’s incentive compensation (namely bonuses) have increased by nearly 42%, which means its compensation to revenue ratio stands at a not ungenerous 58.4%.

Separately, Andrew Brogden and Robert Reid were two Investec traders who happily received multi-million pound bonuses for three years under an informal arrangement before the golden goose started laying mere six-figure eggs in 2011. Then they decided the formulae used to calculate their bonuses was unfair and have been trying to sue the South African bank for £6.75m in lost earnings.

Yesterday their epic court case was finally tossed out and Investec emerged victorious. Unusually for a financial institution, its statement was somewhat aggressive and self-congratulatory:  “Investec had to take a stand in this matter, we had to do the right thing by our shareholders and our dedicated employees. This was a baseless claim, and an unwarranted attack on our institution, our culture and values,” said its chief executive David Van Der Walt.

The judge described their claim as “fanciful”.


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