Number of EU bankers earning above €1mn hits record following Brexit

The number of bankers and investment professionals in the EU earning more than €1mn hit a record in 2021 as investment banking boomed and Brexit pushed more staff to the continent.

The ranks of top earners swelled more than 40 per cent to 1,957 in 2021, according to figures released on Thursday by the European Banking Authority. It is the highest level since the EBA began data collection in 2010.

The surge highlights a consequence of Brexit, where senior bankers have had to relocate from London to EU financial hubs.

“This increase is linked to the overall good performance of institutions, in particular in the area of investment banking and trading and sales, continuing relocations of staff from the UK to the EU and a general increase in salaries,” said the EBA.

Italy, France and Spain took the lion’s share of the increase, with 70 per cent, but Germany remains the member state with the largest population of high-earning bank employees, close to 600.

The EBA’s data was collected in August 2022, as most bonuses were awarded between April and June.

Investment bankers were the single largest subgroup, with almost 750 earning above €1mn across the EU. The highest-paid banker in the EU, according to the EBA, was one in Spain who earned between €14mn and €15mn in 2021.

“A significant amount of variable remuneration corresponds to one severance payment,” the EBA said. 

The UK has long been concerned that post-EU uncertainty could have an impact on key sectors such as financial services.

In March 2021, the Bank of England demanded that lenders seek approval before relocating UK jobs or operations to the EU, following fears that European regulators were asking more staff to move there than necessary for financial stability purposes after Brexit.

The government has also taken steps in an effort to boost competition.

Former UK chancellor Kwasi Kwarteng announced plans to remove the bankers’ bonus cap in last year’s disastrous “mini” Budget, which his successor Jeremy Hunt confirmed.

Hunt unveiled a broad package of reforms in Edinburgh in December, including relaxing “ringfence” rules intended to separate riskier investment banking from retail operations.

Hunt said many of the more than 30 reforms were only possible because of “freedoms” gained from leaving the EU. However, earlier in January, Harriett Baldwin, the JPMorgan banker turned MP who now heads the Treasury select committee, said the government was being “disingenuous” in describing these changes as a Brexit dividend.

Senior executives are sceptical as to whether the Edinburgh reforms were sufficiently bold to provide a second “big bang” for the City of London. There are also concerns that the lack of an equivalence deal between the UK and the EU to recognise each others’ rules is hampering the UK’s competitiveness.