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The announcement yesterday by Robert Walters (RWA:LSE), the recruitment firm which earns one quarter of its fee income from supplying staff to banks, that it is likely to break even in the 12 months to 31 December 2009 rather than fall into an expected 2 million Pounds pre-tax loss, can partly be explained by the UK government clampdown on bankers bonuses, The Times reports.
Bonus restrictions on state-backed banks are prompting a defection of employees to private sector banks where no such curbs exist. Since Robert Walters profits are influenced by the frequency of their candidates' movements between jobs, this has had a positive effect for the staffing group.
Robert Walters should also benefit from a shift from high bonuses to high salaries, which is currently being practised in the banking industry in order to reduce the effect of the one off super tax on bonuses recently announced by the Chancellor of the Exchequer (Finance Minister). The reason is that Walters's fees are calculated on the basic pay, not on total remuneration.