The UK government’s challenge to the European Union’s cap on bankers’ bonuses has been throw out by the advocate general.
The UK government’s challenge to the European Union’s cap on bankers’ bonuses has been throw out by the advocate general.
The EU law limits a bonus to no more than a banker’s fixed pay or twice that level with shareholder approval.
Advocate general Niilo Jääskinen today ruled that EU legislation limiting bankers’ bonuses is valid.
Earlier this year the European Court of Justice announced that the UK had failed in its legal challenge to prevent 11 EU Member States – including France, Germany, Italy and Spain – introducing a Financial Transaction Tax across shares, bonds and derivatives.
A recent survey found that nearly half (49 per cent) of British bankers reported higher bonuses this year, compared with 47 per cent in the US and Hong Kong. The average bankers’ bonus globally was 29 per cent higher in 2014 than a year ago.
The government had previously claimed that restricting bankers’ bonuses would damage Britain’s competitiveness.
Responding to the advocate general’s ruling, Luke Hildyard of the High Pay Centre told Left Foot Forward:
“Many people will find it striking that the government was in court, spending taxpayers’ money to defend bankers’ seven figure bonuses in the immediate aftermath of yet another banking scandal, this time relating to foreign exchange markets. It sends totally the wrong message about priorities.
“Despite the banking industry’s bleating, there is little evidence that cutting bankers’ ludicrous pay packages will hurt them. The head of UK Finance and Investments, which manages the taxpayers’ stake in bailed-out banks, recently said that the bonus cap had had no material impact on competitiveness at RBS.”
10 Responses to “EU rejects Osborne’s bank bonus cap challenge”
Foullaini
Osborne seems to have forgotten we’re not a sovereign country.
Matthew Cruickshank
Where big finance is involved, nobody really has any sovereignity..
Selohesra
If anyone thinks for one minute this will reduce bankers’ total compensation they are deluded. Ways around will soon be found including huge increases to basic salary – which has added problem of being harder to reduce in bad years.
Mike Stallard
Wrong enemy! Yes, the banks are full of greedy people who confuse London with Vegas. We all know about that.
The problem is the EU plutocrats who decide what is good for a fringe country on the borders of Europe, far away from their own banking system in Frankfurt and the ECB and the IMF.
They really do not care if our banks fail to provide the money for the welfare state. They really don’t.
blarg1987
You may be partially right, however the underlying problem, is performance related pay. This has led to a culture of people bending even breaking rules to get a bonus at any cost hence people being miss sold products and services from door salesmen and and collapse of the financial system.
If this cap means higher salaries that reflect in a change in banking behaviour then that can only be a good thing.
What will be interesting know will be the governments response if it rejects the EU legislation then it will torpedo the governments argument of not being able to do certain things because of “EU law” .