By Anna Teo

REDUCED bonuses but bumped-up base salaries, by as much as 100 per cent or more.

That's what some investment bankers here can expect in their 2010 pay- slips as a beleaguered sector seeks to retain staff in the wake of a crackdown on bonuses - and as market activity gathers pace.

It's an emerging pay trend among banks. Citigroup shifted the focus from bonus to base globally for certain employees in June; Credit Suisse announced in October its new compensation structure for 2009 and 2010; and a number of other banks are expected to do likewise in their next salary adjustments in January or February.

The shift towards base pay is, of course, quite the opposite of the wage refrain in Singapore. For years, the National Wages Council (NWC) has urged employers to reward employees more in the form of variable payments than the built-in increment.

But, with the global tide against banking excesses, including caps on bonuses, in the past year - and particularly after the United Kingdom's move last week to tax bank bonuses - the big banks have little choice but to repackage their payouts, especially for front-office profit-drivers such as dealers and traders.

Already, according to UK media reports, more than 1,000 investment bankers have quit Royal Bank of Scotland (RBS) to join rival banks for better financial rewards since the British government first ordered it to clamp down on bonuses this year. Barclays Capital, Nomura and Societe Generale were reported to be among those that made overtures to RBS bankers with bumper pay deals.

In June, Citigroup raised salaries for certain staff - particularly investment sales and trading bankers - by as much as 50 per cent as it sought to work around the bonus curbs it came under after receiving US government bailout funds.

In a statement out of New York then, the bank said: 'Citi continues to examine ways to ensure its employee compensation practices are competitive in this very challenging market environment. Any salary adjustments are not intended to increase total annual compensation, but to adjust the balance between fixed and variable compensation.'

Zurich-based Credit Suisse said in October that it was changing the pay structure of its senior executives - some 7,000 managing directors and directors worldwide. The overhaul, effective January, will result in a higher proportion of the base salary in the total pay, with bonuses split evenly between cash and stock. The bonus is not only deferred, paid out over 3-4 years, but it is also tied to the bank's return on equity and average stock price - effectively, a clawback provision.

The new pay structure, the Swiss bank said, is in line with the guidelines for best compensation practices endorsed by the G-20's Pittsburgh summit in September.

Early this month, Barclays Plc was also said to be raising the basic salaries of investment bankers as much as 150 per cent, and backdated to mid-2009.

But Britain's plan for a 50 per cent tax on bank bonuses exceeding ????pounds;25,000 (S$56,800) may have thrown a spanner in the works amid concerns that the pay restructure may be construed as an avoidance measure. The one- time 'bank payroll tax' applies to all bonuses awarded between Dec 9, 2009, and April 5, 2010.

Barclays Capital in Singapore declined to comment on the compensation issue. And - apart from those that have gone public with their pay plans - neither did other banks contacted.

But observers believe that the move to load the base salary as watchdogs sink their teeth into the long-entrenched bank bonus culture - for now mostly applied selectively to senior staff and profit-drivers - will be a growing trend among banks.

Meanwhile, France this week joined Britain in imposing a similar one-time levy on bank bonuses. And Deutsche Bank yesterday said it will spread the cost of the UK bonus tax across its staff worldwide. Said Josef Ackermann, CEO of the German banking group, in an interview with the Financial Times: 'If parts (of the cost of the tax) are paid out of the bonus pool, we would seek to globalise it. It would be unfair to treat UK bankers differently.'

This article was first published in The Business Times.