Penny wise, pound foolish?

Business News

1,000 UK bankers hit exits over pay

By PAUL THARP

Last updated: 4:14 AM December 7, 2009

In a London preview of Wall Street's bonus nightmare, more than 1,000 investment bankers have quit Royal Bank of Scotland to work at rivals due to curbs on their paychecks, according to people familiar with the situation.

Wall Street banks fear top talent would flee en masse for greener pastures if Uncle Sam's pay czar, Ken Feinberg, and Congress try to put more ceilings on bonuses and pay at financial firms.

In the UK, the rules are modeled after US actions to curb pay at firms bailed out by the government.

RBS will soon be about 84-percent owned by the British government due to recent bailouts.

The protest exodus at RBS -- first reported on the Web edition of the Times of London -- involved less than 5 percent of its banking professionals.

Some headhunters see more bankers jumping ship in the coming year as the controversy deepens over pay freezes and curbs.

Barclays Capital, Nomura and Société Générale are among the banks poaching RBS talent, offering hiring bonuses of up to $1.2 million, the report said.

Barclays said it would double 2009 bonuses of RBS, retroactive to June, sources said.

RBS hopes to stem defections by having its board boost its bonus pool by about 50 percent to $1.5 billion.