TORONTO – Royal Bank of Canada and National Bank of Canada led the 7.5 percent surge in bonus awards among the country’s lenders this year, bucking a global trend of pay cuts on Wall Street and in London.
Royal Bank, Canada’s biggest by assets, and National, the sixth-largest lender, boosted variable compensation by 11 percent in the year ended Oct. 31, the biggest increases among the country’s main banks. Canadian Imperial Bank of Commerce was the only one among the group to pare its bonus pool, trimming 2 percent from last year’s allocation.
The Canadian bonuses are not remarkable, but relative to what their peers are getting in London and the U.S., it’s great, Bill Vlaad, president of Toronto-based recruitment firm Vlaad & Co., said. We never saw the true upside of the glory years in the bull market, but we’ve reaped the rewards now by not having the abysmal downside in the tough years.
Wall Street workers are facing reduced pay or job losses this year as revenue growth wanes and shareholders demand higher returns. JPMorgan Chase, the largest U.S. lender, and Citigroup, the third-biggest, may shrink average bonuses for investment bankers and some other employees by as much as 2 percent and 10 percent, respectively, people with direct knowledge of the matter said. Bankers and traders in Europe can expect at least a 15 percent cut in pay as bonus pools may be reduced by half.
Canadian banks, ranked the world’s soundest for five straight years by the Geneva-based World Economic Forum, collectively set aside $10.4 billion for bonuses this year. The country’s lenders posted record profit for the year, with growth partly lifted by trading and gains from investment banking.
The pools reflect the amount reserved, not paid out, and don’t include base salaries and other compensation. Bonuses are typically awarded this month. Canadian banks set aside $10 billion for bonuses last year, about 7.8 percent above 2010 levels, according to financial statements.
Royal Bank’s variable compensation rose to $3.7 billion from $3.6 billion, reversing two years of declines. Toronto-Dominion Bank, the second-largest lender, raised incentive compensation 7.8 percent to $1.59 billion.
RBC delivered record earnings and achieved all of our financial objectives for the year, said Rina Cortese, a spokeswoman for the Toronto-based bank. Our variable compensation reflects our employees’ contribution to this success.
It’s going to be a reasonable year for bonuses, Jean Dagenais, a senior vice president at National, said in an interview.