UK to maintain EU cap on bankers’ bonuses after Brexit: CityAM
The UK is set to maintain the EU’s cap on bankers’ bonuses, with the Treasury instead focusing on a range of other measures to shake up financial services regulation after Brexit.
Treasury sources say the measure is not even discussed by Chancellor Rishi Sunak and will not be scrapped anytime soon.
The cap, which was introduced by Brussels after the 2008 financial crash, limits bankers’ bonuses to 100 percent of their fixed salary or to double with the explicit approval of shareholders.
Some in the City say the measure is hurting London’s ability to attract the world’s top talent and should be relaxed now that the UK is free from Brussels regulatory shackles.
Tory MP Jesse Norman, who was sacked as Treasury minister last month, was said to have been very keen on removing the cap while he was Boris Johnson’s head.
“It is just not a priority and the Chancellor is not considering it,” said a source close to Sunak.
The bankers’ bonus cap is overseen by the Prudential Regulation Authority, a branch of the Bank of England, but the Treasury is working closely with the body on changes to financial services regulation.
Myles O’Grady, CFO of Bank of Ireland, listed on Euronext, left the banking industry last month due to pay restrictions.
Veteran City commentator David Buik said any decision not to remove the bankers’ bonus cap was “political” and could result in a similar loss of talent in the UK’s financial services industry.
âIt’s disappointing and I strongly disapprove of the idea that people shouldn’t be paid for what they deliver,â he said.
âIf you don’t allow the City to engage with the best people internationally, you risk not allowing business creation. “
Matthew Lesh, head of research at the free market think tank Adam Smith Institute, said: âWe repeatedly see a failure of imagination, aspiration and ambition.
âRemoving the bonus cap would immediately attract thousands of highly paid workers from the financial sector, which would boost our economy and boost revenue to the treasury. “
Two government reviews this year outlined a series of regulatory changes recommended to improve the city’s competitiveness after Brexit.
Among the recommendations are changes to the stock listing rules to attract more tech unicorns to go public in the UK, allowing Spacs to list in London and reducing capital requirements for insurance companies.
The Treasury also launched a review this week on how to make it easier for listed companies to attract secondary capital through rights issues.
Sunak told a Conservative Party conference last week that he was “continuing all of those things” described in regulatory reviews “to implement the reforms the industry can now benefit from after Brexit.”
It is widely accepted in the City that the government’s changes to financial services regulation mean that Brussels will not grant UK equivalence – a designation that would give the financial services industry extensive access to EU markets. .
However, a Treasury source was more optimistic about this prospect.
âWe still want the EU to accept some form of equivalence,â they said.
“We really don’t tear up EU regulations and if we stick to the spirit of what Brussels does, there are always opportunities for equivalence.”
Bank of England Governor Andrew Bailey said in July there was no sign that Brussels would grant equivalency to the UK.
The Treasury has been contacted for comment.