ING (NYSE: ING) Abolishes Bonuses in the Netherlands
ING (NYSE: ING) has succumbed to public outrage in the Netherlands, and has announced plans to abolish bonuses for its locally based staff.
Bonuses for bank employees have been fodder for discussion and fuel for vitriol since the financial crisis of 2008. Large public groups continuously expressed outrage that banks dare give bonuses, after accepting loans from governments around the world. Although those bonuses have been standard practice in the industry for decades, and critical to the local economies (those bonuses are spent by those bank employees in the markets in which they live), they have nonetheless been the source of much strife.
To combat this, a company spokeswoman explained that, “We are part of society and you need to be open to the opinions in society.” In order to remain competitive and not lose thousands of employees to competitors or other industries, the bank will instead grant its 19,000 employees incremental pay raises over the next eighteen months. Public resentment towards the proposed bonuses was fed by the fact that ING has not yet repaid its bailout loan from the government.
Although symbolically important, the move isn’t like to begin a widespread change to compensation. The banking sector is historic of paying lower salaries commensurate with the time and skills demanded, but compensate with bonuses during good years. It will be interesting to see if the local society will applaud the disappearance of bonuses, or remain equally displeased by its replacement with higher salaries that could leave compensation at the same level.