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Johannesburg - The SA Reserve Bank's bank supervision department will talk to all the country's banks about employee compensation, it said in its annual report for 2009 released on Wednesday.
"South African banking organisations have generally sound principles embedded in their incentive schemes," the report said.
However, cash-based incentive schemes were very skewed towards the short term.
"This phenomenon may result in employees being rewarded for activities that appear positive in the short term. However, such activities may result in large losses before maturity," the report said.
It also found that short-term bonus awards exhibited large-scale differentiation.
"This may result in excessive individualism, to the detriment of the team, the business unit and the organisation."
Recently Finance Minister Pravin Gordhan said that extreme earnings disparities "cause offence not just when they are associated with profiteering or financial malfeasance, but also when the reward for honest work seems disproportionate or weakly aligned with incentives".
In the past, executives have received huge salary packages from banks.
In 2009, former Nedbank CEO Tom Boardman earned about R43m and Standard Bank CEO Jacko Maree about R18m.
The bank supervision department's report also found that South Africa's banking sector remained profitable throughout 2009.
"However, profitability levels were negatively impacted, mainly by an increase in credit losses and operating expenses."
Gross operating income - amounting to R149.7bn for the year ending December 2009 - remained at a level similar to that recorded in December 2008, namely R149.2bn, while operating profit amounted to R35.2bn, the report said.
- Sapa
"South African banking organisations have generally sound principles embedded in their incentive schemes," the report said.
However, cash-based incentive schemes were very skewed towards the short term.
"This phenomenon may result in employees being rewarded for activities that appear positive in the short term. However, such activities may result in large losses before maturity," the report said.
It also found that short-term bonus awards exhibited large-scale differentiation.
"This may result in excessive individualism, to the detriment of the team, the business unit and the organisation."
Recently Finance Minister Pravin Gordhan said that extreme earnings disparities "cause offence not just when they are associated with profiteering or financial malfeasance, but also when the reward for honest work seems disproportionate or weakly aligned with incentives".
In the past, executives have received huge salary packages from banks.
In 2009, former Nedbank CEO Tom Boardman earned about R43m and Standard Bank CEO Jacko Maree about R18m.
The bank supervision department's report also found that South Africa's banking sector remained profitable throughout 2009.
"However, profitability levels were negatively impacted, mainly by an increase in credit losses and operating expenses."
Gross operating income - amounting to R149.7bn for the year ending December 2009 - remained at a level similar to that recorded in December 2008, namely R149.2bn, while operating profit amounted to R35.2bn, the report said.
- Sapa
