SVB’s UK Arm Issues 15m Pounds In Bonuses
SVB’s UK arm reportedly issue £15 million ($20 million) in bonuses to its staff, just months after receiving a symbolic bailout UK arm reportedly issued £15 million ($20 million) in bonuses to its staff, just months after receiving a symbolic bailout from the Bank of England during the height of the COVID-19 pandemic.
According to a report by the Financial Times, the bonuses were handed out in March this year, just two months after the lender sought a £50 million loan from the Bank of England as part of the government’s COVID Corporate Finance Facility scheme.
The report suggests that the payouts were made to retain key staff members and prevent them from being lured away by rival firms. However, the timing of the bonuses has raised eyebrows, given the struggling state of the UK economy during the pandemic.
SVB, which provides banking services to technology and life science startups, reported a net loss of $1.6 million for the first quarter of 2021, despite revenues increasing by 32% year-over-year to $243.3 million. The bank attributed the failure to “substantial investments in our people, products, infrastructure.”
The bank’s CEO, Greg Becker, defended the payouts, stating that the employees in question had performed exceptionally well during the pandemic and had helped the bank’s clients to succeed. Becker also noted that the bank had deferred some of the bonuses and would pay them out over the next two years.
“We believe it is critical that we retain, and incentivize our top talent to deliver for our clients through the pandemic and beyond,”
Becker said in a statement.
The SVB case has sparked a broader debate about executive compensation and bank bailouts during the pandemic. Critics argue that banks and other companies that received government support during the pandemic should not be awarding large bonuses to their staff, given the ongoing economic uncertainty.
In the UK, the government has introduced measures to limit executive pay at firms that receive state aid, but these rules only apply to larger companies. Smaller companies such as SVB are not subject to these restrictions.
The payouts at SVB have also highlighted the growing divide between the technology sector, which has thrived during the pandemic, and other parts of the economy that have struggled.
Tech firms like Amazon, Apple, and Google have seen their valuations soar during the pandemic. In contrast, many traditional brick-and-mortar businesses have been forced to close their doors due to lockdown restrictions.
Some argue that the huge rewards being given to tech employees are exacerbating this divide and fueling resentment among the wider public.
The debate over executive compensation will continue as the world emerges from the pandemic and economies seek to recover. While many businesses have suffered during the pandemic, a select few have profited handsomely, and the rewards for their employees reflect this.
However, as long as the wider economy remains in a fragile state, it is likely that the payouts to the top earners will continue to generate scrutiny and criticism.
SVB’s UK arm reportedly issue £15 million ($20 million) in bonuses to its staff, just months after receiving a symbolic bailout from the Bank of England during the height of the COVID-19 pandemic.
Critics argue that banks and other companies that received government support during the pandemic should not be awarding large bonuses to their staff, given the ongoing economic uncertainty.