Confused bankers are reluctant to defect

By Simon Duke for MailOnline
Updated: 03:25 EDT, 7 April 2011

The merry-go-round of City executives has slowed to a crawl due to 'confusion' over the new rules on pay and bonuses, according to one of Britain's biggest recruitment firms.

Bankers: Reluctant to defect because bonuses now spread over number of years

Bankers are becoming increasingly reluctant to defect to rivals as regulators force banks to spread bonus payments over a number of years, staffing giant Robert Walters said.

Robert Walters, founder of the eponymous firm, believes many City workers are 'waiting until the dust settles' on the new regulations, which were brought in to curb risk-taking in the banking sector.

In the past many City workers would get itchy feet in the wake of the annual bonus round in February and March.

But the drive to defer awards means that executives now have to forego lucrative future pay-outs if they want to switch employers.

'The conditions over bonus and pay structures (have) got to calm down before people will move,' Walters told the Mail. 'It's not quite as simple as it used to be.'

Despite the threatened exodus of banks from the UK, Walters has seen only a 'trickle' of city workers looking to move offshore. But it is the new 50p rate of income tax, rather than the structure of bonus payments, that is driving some bankers abroad, according to Walters.

'Some people are aghast at the amount of personal tax they have to pay,' he said.

Financial services account for a 'significant minority' of Robert Walters' UK revenues, which grew by 10% to £11.1m between January and March.

At its Asian division turnover surged 23% to £19.3m over the period - despite having to close its office in Tokyo for ten days after the earthquake and tsunami last month.

Around 20 of its 130 workforce in the Japanese capital left the country temporarily in the wake of the catastrophe. It will take 'some time' before its Japanese unit recovers fully. 'Recruitment is not at the front of anyone's agenda right now,' said Walters.

Surprisingly, the group's strongest performing region was continental Europe, where income soared by 37% over the first quarter.

Despite the debt crisis buffeting the region, European firms show no signs of implementing hiring freezes, for temporary staff at least.

According to Walters, this is down to the 'onerous' employment laws in many European Union nations, which give continental workers stronger workplace rights than their British counterparts. 'There's more demand for temps as you don't have problems with hiring and firing,' said Walters.

• 419,400 people employed in UK banking industry

• Income and corporation tax hit £53.4bn in 2010

• City accounts for 37% of global foreign exchange market

• City handed out estimated £7bn in bonuses last year