Thursday

3rd Dec 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

Become an expert on Europe

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

... or subscribe 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. Valéry Giscard d'Estaing dies from Covid-19 complications
  2. Belgium expelled 15,000 EU nationals in recent years
  3. Centre-right EU lawmakers want to expel Fidesz MEP
  4. Slovak journalist's killer gets longer sentence
  5. Egyptian leader embarks on 'execution spree'
  6. Covid-19: UK first to approve Pfizer/BioNTech vaccine
  7. Car kills five people in German town's pedestrian zone
  8. UK warns no-deal Brexit still possible

MEPs seek parliament inquiry into Frontex

Some MEPs now want a formal inquiry into Frontex, plus member states, and the European Commission over allegations of illegal pushbacks. Dutch MEP Tineke Strik says she has so far received backing from the Greens, liberals and far-left GUE.

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!
  2. UNESDAMaking healthier diets the easy choice
  3. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  4. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  5. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  6. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector

Latest News

  1. EU keen to repair damage of Trump years
  2. Szájer 'sex party' coverage shows Orbán's media control
  3. EU Commission mulls ways round Hungary-Poland block
  4. Revealed: Hit to EU mental health services during Covid-19
  5. MEPs seek parliament inquiry into Frontex
  6. Erdoğan to face human rights scrutiny next week, EU says
  7. 2020 Prague European Summit: 'Real solutions, acting together'
  8. Nationwide protests reveal awakening of Poland's youth

Join EUobserver

Support quality EU news

Join us