Here’s how absurd the Massachusetts housing market is: Millionaire banking executives need shareholders to help pay for their posh pads.
Last year, Citizens Bank spent $131,031 so Robert D. Matthews Jr., its head of commercial banking, could stay at a corporate apartment in Boston, according to filings released this week as the company prepares to go public and make even more money. He was holed up at the Mandarin Oriental, but kind of roughing it, actually. The executive’s accommodations didn’t even offer penthouse views.
I’m not sure why Matthews couldn’t pay for the place himself. He wasn’t exactly scraping by. With a base salary of $750,000, and all the other goodies the bank threw at him, including a bonus and stock awards, he took in a tidy $2.2 million.
Think about that next time you open a $1,000 CD at Citizens that’s earning 0.05 percent interest.
His boss, Bruce Van Saun, arrived last fall from the parent company, Royal Bank of Scotland, and received a housing allowance of $252,269. If you think Boston is pricey, try the United Kingdom, where Van Saun was living. He was paid $5.7 million last year, and now calls New Jersey home, where shareholders don’t pay for the roof over his head.
Citizens is based in Providence and runs the second biggest banking operation in Massachusetts after Bank of America. The papers it filed with the Securities and Exchange Commission in advance of an expected IPO serve as a reminder of what hasn’t changed since the global financial meltdown six years ago. All that urgent talk about fixing everything that is wrong with Corporate America has fallen to a whisper.
Inflated salaries remain the norm, and lavish housing allowances for ex-pats are still de rigueur. Not just for bankers, but for the suits in corner offices everywhere.
They are perks that companies will tell you they need to keep top talent fat and happy. But enough is enough when banks keep raising their fees to make another buck off customers who are literally earning pennies on their savings. Since 2008, the average monthly service fee on noninterest checking accounts has nearly tripled to $5.54, and the average ATM surcharge has surged more than 30 percent to $2.60, according to a national Bankrate.com study.
That may seem like small change to bank executives, but such fees matter to customers.
But maybe the British should be even more outraged. Taxpayers had to bail out RBS for $70 billion, and that’s why the banking giant is spinning off Citizens to help pay off its debt to society.
The housing allowance for Matthews, Citizens’ commercial banking guy, ran out in February and he has since completed his relocation from New York.
So who else can I pick on? Look no further than Santander, the Spanish bank that bought Sovereign and is now the third largest retail bank in Massachusetts.
Roman Blanco, the chief executive of its US operations, gets a $30,000 monthly housing allowance that helps pay for his $4.3 million town house in the Back Bay. His total compensation was $2 million last year, according to federal filings.
Nuno Matos, Santander USA’s managing director of retail banking, gets a $10,000 monthly allowance. He got paid close to $2 million last year.
Santander wouldn’t tell me why they need to pay executives to take on hardship assignments in Boston. Is our city really that much of a backwater compared with Madrid?
Now leave it up to the Canadians to carefully count their loonies (seriously, that’s what they call their money). Last year, TD Bank, whose parent company is based in Toronto, gave new US chief Mike Pedersen a housing allowance of about $600,000 to move his family from Toronto to Philadelphia. The costs included support for the sale of his home and temporary housing. Pedersen, who made about $4.5 million last year, does not receive an ongoing housing allowance.
Is there anything we can do about this? “Switch banks,” offers Greg McBride, chief financial analyst at Bankrate.com. “Neither customers nor shareholders are hostages.”
He’s right. We have a lot of choices, so do companies.