Britain's challenge on EU banker bonus cap seems to fail

GMT 00:48 2014 Saturday ,22 November

Arab Today, arab today Britain's challenge on EU banker bonus cap seems to fail

European Union (EU)
London - AFP

 Britain's fight on opposing European Union (EU)'s banker bones cap is on the course to fail, as an adviser to the European Court of Justice has rejected the UK's challenge, reported BBC Thursday.
The cap restricts bonus to 100 percent of banker's basic salary or 200 percent with approval from majority of shareholders.
Advocate General Niilo Jaaskinen gave an opinion that the EU legislation limiting the ratio was valid, reported BBC.
"Fixing the ratio of variable remuneration to basic salaries does not equate to a 'cap on bankers bonuses', or fixing the level of pay, because there is no limit imposed on the basic salaries that the bonuses are pegged against," said Jaaskinen.
George Osborne, Chancellor of the Exchequer of Britain, and Mark Carney, Governor of the Bank of England, have criticized the EU bonus cap as "counterproductive". Britain started a legal fight against the proposal last year.
The British Bankers' Association (BBA) said in a statement that:" There have already been sweeping changes made to the way that bank staff are paid since the financial crisis. Bonuses are smaller and staff are rewarded for making decisions that benefit businesses, shareholders and the broader economy."
"We believe that shareholders should be given powers to determine staff pay, not politicians. That's why banks consult with investors before setting staff pay and shareholders also have the power to vote on the pay of senior bankers," said BBA.
The industry association also warns that the plan puts European banks at a disadvantage when competing with firms in other parts of the world.
However, John Thanassoulis, professor at Warwick Business School, said in a note:"The UK is finding itself without allies in its quest to have the bonus cap struck down. It is time to change tack."
"A cap on the total bonus pool in proportion to appropriately weighted assets would improve financial stability, not damage it. Such a bonus pool cap would lower pay levels across the financial sector, an outcome many would find desirable," said Thanassoulis.

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