The EU seems set to approve a new cap on bankers’ bonuses, limiting them to no greater than the amount of the basic salary. This is set to not only hurt the EU, but particularly the UK interests.
London is a major world financial centre, with the UK benefiting from the enormous amount of international trade flowing through.
As it stands, the proposed new rules don’t just affect the European employees of EU domiciled banks but also their employees worldwide. This would hand such a competitive advantage for banks based outside the UK. For example, JP Morgan (an American bank) would only have to apply this rule to their EU employees and not for their employees outside the EU. So, long term, what’s the point in London based banks, with substantial activities outside the EU staying in the UK?
Banks don’t have to be in Europe to conduct successful business in Euro denominated finance. There are plenty of alternatives that would welcome the opportunity to take London’s place – New York, Hong Kong or Singapore, for example.
Michael Fallon, the Enterprise Minister said ”There is a very special risk we have here in the UK, which does not apply to any other European country, which is that we have major international banks that are based in London but have branches all over the world..…we need to make sure that any regulation that applies across Europe is flexible enough to allow those banks to continue to compete from London”.
Don’t the Lawmakers of the EU get it? We’re in a global economy – yes, legislate about bankers bonuses, but make sure the rules are fair.
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