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Among Canada’s lenders in 2012, Royal Bank of Canada (NYSE:RY) and National Bank of Canada (NTIOF.PK) led the 7.5 percent jump in bonus awards, resisting a world trend of pay cuts in New York and in London. Royal Bank, which is the country’s largest by assets, and National Bank, the sixth-largest lender, increased variable compensation by 11 percent in the year ended October 31st, representing the heftiest rises among the main banks. Toronto-Dominion Bank (NYSE:TD), the second-biggest of the lenders, raised incentive compensation by 7.8 percent to C$1.56 billion while Bank of Nova Scotia (NYSE:BNS), the third-largest lender, elevated performance-based compensation by 9.4 percent to C$1.48 billion, marking the third-highest percentage increase of the firms. Of the group, Canadian Imperial Bank of Commerce (NYSE:CM) was the only one to shrink its bonus pool, cutting 2 percent from its 2011 allocation.
As if the Libor matter were not enough, banks now have to worry about the Euribor, or the euro interbank offered rate, which is increasingly being challenged. Knowledgeable sources believe that the European Union will soon accuse multiple banks of attempted collusion in the setting of Euribor. Barclays (NYSE:BCS) has already admitted its attempts to rig the rate and other banks will probably be pressured by regulators in the United States, the United Kingdom, and elsewhere into confessions, say industry and regulatory officials. UBS (NYSE:UBS) could be next, say inside sources, as that bank nears settlement of regulator claims that it tried to rig rates including Euribor.
While many banks in Europe are having to divest loan portfolios so as to raise capital and to meet stress testing, Bank of America Merrill Lynch (NYSE:BAC) emerges as one of the largest buyers, having purchased a minimum of $9.44 billion worth of loans since late 2011, including a $1.2 billion portfolio of Latin American loans from The Royal Bank of Scotland (NYSE:RBS). The firm holds some of the assets through which to deepen client relationships and profitably divested the remaining loans to end investors. However, BofA has seen formidable competition from other buyers including Citigroup (NYSE:C), Barclays and hedge funds.
The hundreds of senior managers at Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) who earned in excess of $200,000 in 2011 saw their take-home pay levels investigated by the inspector general for the Federal Housing Finance Agency, which report is slated for release Monday. Last year was when the United States Congress threatened to significantly slash the pay of rank-and-file employees by placing the firms on federal wage scales.