Financial News

  • 23 January 2014, 15:16

Morgan Stanley Joins Race To Beat EU Pay Cap

Morgan Stanley is to join the ranks of global banks offering substantial pay rises to London-based staff ahead of the imposition of new European remuneration rules.

Sky News understands that the Wall Street bank is finalising proposals to offer senior employees at its Canary Wharf base cash payments that will enable it to continue paying large bonuses.

Insiders said that Morgan Stanley was likely to operate a similar scheme to that planned by rival Goldman Sachs, which will involve eligible staff being handed big increases to their annual salaries.

The awards may involve lump sums paid out at the end of the financial year, according to a person briefed on Morgan Stanley's deliberations.

The news about Morgan Stanley, which employs thousands of people in the UK, is significant because it underlines the extent to which major banks are seeking to negate the impact of the European Union measures.

Sky News understands that Citi and Deutsche Bank are also working on similar incremental payments for senior staff.

The move to retain key employees is likely to mean significantly increasing the 113 employees designated as "code staff" by Morgan Stanley in 2012. Code staff are those who are deemed by regulators to hold senior responsibilities.

Last week, Sky News revealed that Goldman is to hand substantial rises in fixed pay to hundreds of London-based staff.

The shift from variable to fixed pay, about which staff will be informed shortly, will in some cases be worth hundreds of thousands of pounds, although the sums are not expected to impact the total amounts that Goldman's top risk-takers in London will earn.

Under the new pay framework imposed by Brussels, the bank will only be able to pay double the level of salaries in variable pay to London-based staff in any given year.

The new European Union rules will restrict the amount that banks operating within the trading bloc can pay to their staff as a proportion of their basic pay.

From this year, banks will be allowed to pay up to 100% of salaries as bonuses, or double that sum with the approval of the company's shareholders.

Barclays and HSBC are among the other banks which have devised methods for enhancing the remuneration of key staff as they seek to avoid a defection to rivals who are less hindered by the EU ratio cap.

A Morgan Stanley spokesman declined to comment.

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