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Santander executive chair Ana Botín has welcomed the removal of the UK’s banker bonus cap and said a similar move in the rest of Europe would better align bankers’ interests with those of their shareholders.
The UK last month scrapped the controversial rule brought in following the global financial crisis of limiting banker’s bonuses to twice their base pay.
The change was heralded by the UK government as a measure to boost the City of London’s competitiveness after Brexit, but it was criticised by the opposition Labour party and unions for benefiting some of the country’s wealthiest workers at a time when many low-paid employees were struggling to make ends meet.
Botín, whose bank is Europe’s fourth-largest by assets, said Santander would consider changing the way it paid its UK staff following the removal of the cap.
“It’s a business where you should be compensated in a variable way, so I think it’s good news for our industry, it makes a lot of sense,” she said in an interview with the Financial Times to open the Global Banking Summit on Monday morning. “I’m sure we will adapt to that.”
The EU still has the bonus cap in place, which was designed to discourage finance workers from taking excessive risks following the financial crisis.
Asked whether she would welcome the European cap being scrapped, Botín said: “I think that [would allow] a better alignment with shareholders, so it would be positive, of course.”
Bank executives have long argued that the restrictions on bonuses led to inflated fixed pay, which made it harder for them to manage costs in periods of lower revenues.
Critics of the cap argued that removing it would do little to change the way bankers are paid as they are unlikely to accept reductions in their guaranteed salaries in exchange for higher but more volatile bonuses.
Santander’s prominent position within the UK’s retail banking market — where it has 14mn active customers — has frequently drawn predictions that it could play a key role in consolidating the sector. It was one of several high street lenders that considered bids for Metro Bank when the UK challenger ran into trouble last month.
But Botín said that Santander’s growth strategy did not depend on buying up other banks. “We do not need acquisitions to grow profitability . . . Having said that, we have always said that if there are small add-on acquisitions, we will take a look,” she said.
Santander has set aside $250mn to grow its corporate and investment bank over the next two years and has already hired 100 executives this year, with many former Credit Suisse bankers joining its US office.
The moves were part of an eight-year strategy Botín has pursued of broadening the services Santander offers to its 166mn customers worldwide.
“Strengthening our presence in the US is essential, it’s the deepest capital market in the world,” Botín said. “We need the talent to do that.”
She added: “It’s really important that the focus continues to be to increase fee income [and] strengthen our advisory capabilities, because that gives us a lot of extra business with customers that we already are banking with.”
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