MONEYWEB / 09 SEPTEMBER 2019 - 00:01 / HILTON TARRANT
It isn’t just execs who are being handsomely rewarded.
Over the past decade, fixed remuneration plus short-term incentives for executives at the country’s largest banks has soared. Even excluding the value of long-term incentives such as share options, pay is up anything from 69% to 505%.
The recent Moneyweb analysis of bank executive remuneration highlighted the limitations of using just two arbitrary years as the basis for comparison (shifting the start/end dates would yield dramatically different results).
But it’s not just executive remuneration that has skyrocketed.
Over the same period, the median remuneration of employees at these five banks has more than kept up. Average remuneration at both Absa Group and FirstRand is up over 200% over the decade, while the increases at Nedbank and Standard Bank are 191% and 183%, respectively. Average remuneration at Capitec is 173% higher.
This means that average pay at each of the banks has roughly tripled over the past 10 years.
The methodology used to calculate this is simple: total staff costs are divided by the total number of employees at each banking group (this includes staff in South Africa as well as the banks’ international operations).
This only tells half the story, however. Over the same period (January 2009 to January 2019, used because substantial changes were made to the basket in January 2009), consumer price inflation is up 167%. Although growth in average remuneration at the banks has outpaced inflation, at Capitec it is ever so slightly higher (half a percentage point a year).
At FirstRand and Absa, increases in median remuneration of staff have been nearly four percentage points a year ahead of inflation.
But not only are the increases over the past decade telling, the median salary at the four large ‘full service’ banks is approximately R50 000 a month. It must be noted that these four obviously have corporate and investment banking divisions, which will drag the average upwards. At Capitec, with a far greater proportion of front-line branch staff, the median is R23 000 a month. Included (to some extent) in these calculations are staff long-term incentive schemes, the costs of which are rolled up into the total remuneration numbers. Here, certain staff will benefit disproportionately to others, based on management level, duration of employment, and employment equity status (black staff will generally participate in staff BEE schemes).
Staff numbers at the four full-service banks have grown over the past decade, but at a rate lower than inflation (plus GDP growth). Coupled with this has been the trend – particularly in recent years – for the four banks to cut their physical footprints, both in terms of the number of branches as well as the floor space these take up. This generally means fewer front-line bank service staff.
Across this period, Capitec has aggressively expanded its footprint. At the end of its 2009 financial year, it had around 400 branches. This has more than doubled in the past decade, but the pace of this expansion has been slowing. It added just 14 outlets to a total of 840 in the year to end-February 2019.
* Hilton Tarrant works at YFM. He can still be contacted at firstname.lastname@example.org.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER