TSB and Santander staff bonuses may be affected by City fines | Banking operations

Bankers at TSB and Santander UK are at risk of having their annual bonuses cut after the high street lenders were hit with multi-million pound fines by the City regulator last month.

The retail banks’ respective pay committees are currently considering how much money to allocate to bonus pools for all staff, and are believed to take into account penalties linked to failures around TSB’s IT meltdown in 2018, and Santander UK’s anti-money laundering controls. .

This could mean Santander UK’s around 20,000 staff – including managers – could be forced to share less than the £213m they collectively took home in bonuses last year.

The Financial Conduct Authority fined Santander £107.7m in early December after discovering “serious and persistent gaps” in its money laundering controls, which resulted in £298m of suspicious transactions passing through business customer accounts between 2012 and 2017.

Santander would not confirm whether any current or former executives will face targeted cuts to their bonuses as a result of last month’s penalty, but said: “The bonus pool is determined taking into account performance against a balanced scorecard. This will take into account any fines.”

Meanwhile, TSB’s 5,700 staff and its senior managers are waiting to hear whether they will share less than the £27m they were paid in bonuses last year, after the FCA hit the bank with a long-delayed fine over a botched IT migration that cost millions of bank customers locked out of their accounts for several weeks in 2018.

The regulator fined the bank £48m in mid-December for “widespread and serious” failings linked to the debacle, which arose as part of its separation from its former parent, Lloyds Banking Group.

Any cuts to TSB’s variable pay pool could end up strengthening the unions’ demands for higher pay, given that pay negotiations for 2023 are currently underway.

“Obviously, at this time of year, TSB employees are interested in what their variable pay will be,” said Ged Nichols, general secretary of the Accord union. “These questions are part of our ongoing discussions with TSB. We hope to be able to reach an agreement in principle with the bank relatively soon, so that we can submit it to our members for a final decision.”

TSB said: “The final decision on the award of variable pay will be made by the remuneration committee later this month and announced when we publish results.”

However, targeted cuts in executive bonuses are unlikely. All the managers who worked at the bank in 2018 have since left TSB, and had their own bonuses for 2018 canceled in light of the meltdown.

Metro Bank’s pay committee will also be forced to consider whether its own staff and executive bonuses should be affected by a £10m fine announced last month in relation to the 2019 accounting scandal.

The regulator’s three-year investigation concluded that Metro misled investors, failing to properly warn them after discovering it had wrongly classified £900m of loans as less risky than they actually were.

Metro Bank declined to comment.

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