Business - Banking unions rebuff bonus scheme

Banking unions rejected moves this week to tie annual staff bonuses to positive reports from internal audit and compliance departments, unless safeguards were put in place.

Last week, US banking giant American Express revealed a radical bonus structure that moved away from the standard banking practice of basing bonuses solely on the profit performance of individuals, departments and overall bank profits. Amex chief executive Harvey Golub received a $2.3m (#1.4m) bonus last year.

Instead, the company included reports from compliance officers and internal auditors in their appraisal system before calculating bonuses.

Institutional investors in the UK welcomed the decision, saying it would reduce fraud.

But Rory Murphy, head of the NatWest Staff Association, said he was concerned that the real motivation for the new bonus system was to cut payouts to staff.

‘We would see this as a way of attacking pay levels rather than protecting the organisation.’ He said banks and other financial services companies should make bonus payments part of a partnership with staff to increase compliance within an organisation.

Jon Robinson, head of research at the Banking, Insurance and Finance Union, said the union wanted better protection for customers, but safeguards would be necessary.

‘If the system put in place makes it increasingly difficult for staff to get their bonuses, then we would have a problem,’ he said.