UK’s top bankers pulling in multi-million pound salaries as UK watchdog probes ‘measly’ savings rates
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CEOs being handed multi-million pound salaries have been asked to justify “measly” savings rates at some of the UK’s top high street banks, with some accounts remaining below two per cent despite soaring mortgage and loan charges. Nine banks are being given four weeks to explain how such rates represent fair value to customers before facing “robust action” by a UK watchdog.
Higher interest rates have led banks to increase mortgage costs. But savings rates are not rising as fast, sparking a 14-point “action plan” by the Financial Conduct Authority (FCA) which seeks to crackdown on the UK savings market.
The FCA unveiled the plan on Monday (July 31), after it found the UK’s largest banks including Lloyds, NatWest, HSBC and Santander had passed on just over a quarter (28 per cent) of UK interest rates rises to the most popular savings accounts between January 2022 to May 2023.
If interest rates are higher, people pay more to borrow on products such as variable rate mortgages - the flip side is that saving rates should also increase. But while the Bank of England interest rate rose from 0.25 per cent to 4.5 per cent, interest rates on these accounts rose on average from 0.07 per cent to only 1.25 per cent during this time.
Fixed-term saving accounts were also hit, with only 51 per cent of interest rate rises passed on to customers.
And while customers continue to struggle through a cost of living crisis, the banks’ top bosses are enjoying bumper pay packets. Lloyds Banking Group chief executive, Charles Nunn, tops the list of big earners taking home £3.8 million in 2022, followed by Santander CEO, Mike Regnier, laughing all the way to the bank with £2.4m.
UK bank CEO salary packages 2002
Here are the full salary packages for the CEO of each of the under-fire banks, according to each bank’s 2022 annual report:
- Lloyds: Charlie Nunn - £3.8 million
- Santander UK: Mike Regnier - £2.4 million (took job in April 2022)
- Nationwide: Joe Garner - £2.1 million (since replaced by Debbie Crosbie)
- Barclays UK: Matt Hammerstein - £1.8 million
- NatWest: Alison Rose - £5.3 million
- HSBC UK: Ian Stuart - £3.2 million
- TSB: Robin Bulloch - £1.8m
- Virgin Money: David Duffy - £2.3 million
In February, NatWest was accused of “unjust” profiteering as boss Alison Rose received a £5.2m pay package. NatWest also upped its bonus pool for bankers after the lender pulled in its biggest profit since 2007 on the back of higher mortgage costs.
NatWest chair Howard Davies defended the bank’s decisions, claiming the bonus pool was up “from a particularly low level” and that the bank was paying its executives less than some of its peers.
Sheldon Mills, the FCA’s executive director, said: “Our opinion is that, absent exceptional circumstances, you should be thinking [of changing savings rates] within a couple of weeks of a base rate change and going through your pricing decisions to move your savings rates. And that is all about getting the value to the savers.
“We want a competitive cash savings market that delivers better deals for savers, where interest rates are reviewed quickly following base rate changes and firms prompt savers to switch to accounts paying higher rates. We welcome the progress that has been made so far but this needs to speed up.”
Banks with the lowest saving rates will have to justify their rates by the end of August, with those failing to do so facing action from the FCA including fines.
Speaking to the BBC’s Today programme in July, Harriett Baldwin, chair of the Treasury Select Committee, said the committee had been putting pressure on the banks “all year” over concerns. She said: “We’re quite sure these rates are measly and that the banks are not treating our constituents fairly.”