Botín (Santander) supports eliminating the limit on variable bonuses in banks

The president of Banco Santander, Ana Botín, welcomed this Monday the recent elimination of the limit on bank bonuses in the United Kingdom, while expressing that a similar measure in Europe would better align the interests of bankers with those of their shareholders. The Spanish entity is in full expansion of its business banking in the US with the incorporation of more than 100 executives so far in 2023, taking advantage of the departures of Credit Suisse.

“This is a business where you have to receive variable compensation, so I think it’s good news for our industry, it makes a lot of sense. I’m sure we will adapt to that,” he said in an interview with the Financial Times. ‘ on the occasion of a banking event organized by the British newspaper.

In October, the United Kingdom repealed a controversial rule that restricted bankers’ variable bonuses to twice their fixed salary, a rule introduced after the global financial crisis. Botín assured during his speech that Santander UK would study modifying the way it pays its employees in the United Kingdom after the elimination of this restriction.

However, it will not be possible for Spain and other countries in the European Union, which still maintains the limit on variable bonuses as a measure designed to discourage bankers from taking excessive risks in order to collect a bonus. Botín was in favor of also extending it to the EU: “It would allow better alignment with shareholders, so it would be positive, of course.”

Although this modification was presented by Rishi Sunak’s Government as a boost to the competitiveness of the City of London after Brexit, the initiative received criticism from the Labor Party and unions for favoring the richest workers at a time of difficulty. . economic due to inflation and the recession that is hitting the British with less income.

Bank executives have long argued that restrictions on variable bonuses have led to higher fixed salaries, making it difficult to manage costs in periods of lower income. However, critics of the cap argue that its removal would probably not change much in the way bankers are paid, since they are unlikely to agree to reduce their guaranteed salaries in exchange for higher but more volatile bonuses.

Growth in investment banking

Santander, with a strong presence in the UK retail banking market with 14 million active customers, has been the subject of speculation about its role in consolidating the banking sector in the country after it participated in the bid round for Metro . Bank, a British rival that got into trouble.

Botín stated that Santander’s growth strategy does not depend on acquiring other banks, although it maintains the possibility of acquiring small complementary entities. The institution has set aside $250 million to expand its corporate and investment banking over the next two years and has already hired more than 100 executives this year, including former Credit Suisse employees who have joined its US office where it operates. wide presence.