Co-op Bank considers bumping up base pay for executives to overcome bonus rules
The Co-operative Bank is considering raising salaries to get around rules that hamper bonuses.
It is understood the bank is looking for ways to increase pay packets in a bid to secure top talent, but is struggling to do so thanks to the bankers' bonus cap rules, which stems from an EU directive.
More specifically, under the rules laid out in the Capital Requirements Directive, the bank is also prevented from doling out variable payments while it is loss making and until it has improved its capital position.
Boosting senior-level salaries is believed to be one of a number of options on the table for the bank's remuneration committee to mull over and further details are expected to be shared with shareholders later on this year.
When the bank revealed its interim results last week, complete with a £177m pre-tax loss, chief executive Niall Booker announced the bank had already arrived at new pay plans for many of the lender's workers but was still working out the details for some of the more senior staff.
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"We hope to resolve this by the end of the third quarter so that we remain competitive and are able to attract and retain talented colleagues," Booker added.
For 2015, soon to be departing Booker raked in total remuneration of £3.9m for his efforts, including £1.3m in salary. Meanwhile, finance chief John Baines, who will shortly be replaced by Barclays and EY veteran John Worth, pulled in £932,000, including a salary of £400,000.
Back in 2014, the lender was the only one to fail the Bank of England's stress tests and has had to plenty of questions to answer in recent years regarding a £1.5bn black hole in its accounts.
The bank also had a brush with scandal in 2013 when its former chairman Paul Flowers was suspended from his role as Methodist minister for buying crystal meth and cocaine.
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Bankers' bonuses have been a sticking point for the industry at large. Late last year, a Bank of England report noted the cap on annual sweeteners had forced firms to raise base salaries and, as a result, banks now had more fixed costs to deal with than they would otherwise, which could create problems in the event of a sudden downturn.