Nearly two-thirds (65%) of financial services firms have increased salaries to offset the impending EU bonus cap in order to retain staff, research from Robert Half Financial Services has revealed.
On average organisations pushed up salaries by 20%, while nearly one fifth of firms increased salaries by more than 30%. Six in 10 (60%) had also increased benefits to staff, according to the findings.
With the EU bonus cap due to take effect from January 2014, which will see bonuses capped at 100% of fixed salary, or 200% with shareholder approval, many executives expressed concern over losing key talent to the new regulations.
More than nine in 10 (93%) UK financial services executives said they were worried about losing talented staff to international opportunities as a result of the cap - with 38% ‘very concerned' and 55% saying they were ‘somewhat concerned'.
Furthermore, more than half (52%) of executives were very concerned and 41% somewhat concerned that the bonus cap and resulting rise in base pay would create an unstable cost structure for their organisation.
Robert Half Financial Services global practice director Neil Owen said that UK financial services organisations needed to explore balanced ways in which to remunerate staff.
"Financial services leaders are evidently concerned about the impending EU bonus cap and its potential impact on the industry's talent pool, particularly as firms look to their top staff to pursue growth strategies."
He added: "A number of large UK financial services firms have already been examining ways to offset the cap, potentially raising salaries and benefits to retain key employees. With the UK competing with other international centres for the world's top financial services talent, firms will need to strike the balance between risk and reward, with additional employee remuneration potentially creating an unstable cost structure."
