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Bankers' salaries rise as firms fear talent exodus over EU bonus cap

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Around two-thirds of UK financial services firms have increased salaries in an attempt to retain talented staff when the EU bonus cap comes into play next year, a survey has found.

Recruitment firm Robert Half found 93% of financial services executives were concerned about losing staff to international opportunities due to the cap, which will apply to awards for performance from 2014.

The cap will limit bonuses at up to twice the level of salary. The EU brokered the deal in February to limit excessive risk-taking in the industry.

The study of more than 100 CFOs and COOs at UK financial services firms showed 52% are 'very concerned' the bonus cap and rise in pay will create unstable cost structure..

Neil Owen, Robert Half global practice director, said financial service leaders are concerned about the potential impact the cap will have on the industry.

"A number of large UK firms have already been examining ways to offset the cap, potentially raising salaries and benefits to retain key employees," said Owen.

"With the UK financial services firms competing with other international centres for the top talent, employers will need to strike a balance between risk and reward, with additional employee remuneration potentially creating an unstable cost structure."

The bonus cap is a setback for the UK Government, which lobbied hard against it. Mayor of London Boris Johnson last month said the proposals are a "boost for Zurich, Singapore and New York" at London's expense.