Sunday

23rd Feb 2020

UK isolated as EU ministers agree bank bonus cap

London has been left isolated in its opposition to bank bonus rules, with EU lawmakers set to agree to cap payments, ignoring last minute opposition from UK finance minister George Osborne.

The new rules, set to be introduced next year, would limit bankers' bonuses to the equivalent of their salary, or two times their salary so long as shareholders agree.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

Although EU finance ministers in Brussels on Tuesday (5 March) agreed to defer some technical points for further negotiation, ministers and the European Commission insisted that the substance of the deal could not be unpicked.

Internal Market Commissioner Michel Barnier said he was "crystal clear" that the bonus cap was a done deal and could not be re-opened. The era where bankers "could be paid more if they took more risks" was "finished", he stated.

Irish finance minister Michael Noonan, who chaired the talks, told reporters after the meeting that there had been a "divergence of opinion on bonuses." But he commented that the "space for further negotiation is quite narrow".

The bonus deal comes are part of legislation - also agreed Tuesday - putting in place rules on capital requirements and liquidity aimed at making the banking sector more robust to cope with future crises.

The EU's 8,000 banks would be required to hold at last 8 percent of top rated capital on their balance sheets, with so-called "too big to fail" institutions required to hold an additional 3.5 percent of capital.

Speaking earlier on Tuesday, Osborne said the bonus agreement "will push salaries up, it will make it more difficult to claw back bankers' bonuses when things go wrong, it will make it more difficult to ensure that the banks and the bankers pay when there are mistakes, rather than the taxpayer."

A UK official told this website that talks on pay would continue, stressing that London wanted to shift remuneration towards long-term performance, insisting that "no country has tougher rules than the UK on bank pay."

The principle of deferred bonuses was put into EU law as part of the previous directive on capital requirements.

McCarthy, the assembly's expert on bank pay, told EUobserver that the UK government had "wasted 18 months by failing to bring any alternative deal to the table until the last minute", adding the UK now had "no allies and no arguments."

Under the current agreement, 25 percent of the total bonus payment could be composed of a five-year bond or security. In an attempt to incentivise deferral, the bond would then benefit from a "discount" when calculating the total bonus payment.

MEPs drop the axe on bank bonuses

The European Parliament has approved measures to curb bank bonuses, part of a wider series of EU reforms intended to prevent a repeat of the recent financial crisis that has decimated the region's economy.

MEPs confirm bank bonus cap

Bank bonuses in the EU will be capped from 2015, as part of banking sector reforms backed by MEPs on Tuesday.

News in Brief

  1. Bulgarian PM investigated over 'money laundering'
  2. Greenpeace breaks into French nuclear plant
  3. Germany increases police presence after shootings
  4. NGO: US and EU 'watering-down' tax reform prior to G20
  5. Iran: parliamentary elections, conservatives likely to win
  6. Belgian CEOs raise alarm on political crisis
  7. Germans voice anger on rise of far-right terrorism
  8. EU leaders' budget summit drags on overnight

German ex-commissioner Oettinger lands Orban job

Hungary's PM Viktor Orban appointed controversial former commissioner Guenther Oettinger to a government council in a way that might break EU rules. Oettinger claims he did not know about the appointment.

Opinion

Why Miroslav Lajčák is the wrong choice for EU envoy

The EU could blow up the Kosovo-Serbia negotiations' reset. Should Miroslav Lajčák indeed be appointed, the two senior EU diplomats dealing with Kosovo would both come from the small minority of member states that do not recognise Kosovo.

Stakeholders' Highlights

  1. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  2. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  3. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  4. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  5. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  6. Nordic Council of MinistersNordic Climate Action Weeks in December

Latest News

  1. No breakthrough at EU budget summit
  2. EU leaders struggling to break budget deadlock
  3. German ex-commissioner Oettinger lands Orban job
  4. How big is Germany's far-right problem?
  5. Plastic and carbon proposals to help plug Brexit budget gap
  6. Sassoli repeats EU budget rejection warning
  7. Why Miroslav Lajčák is the wrong choice for EU envoy
  8. Unhappy EU leaders begin budget haggle

Join EUobserver

Support quality EU news

Join us