Wednesday

27th Oct 2021

UK commissioner deprived of power to oversee bankers' pay

  • Bank bonus pay will fall under the remit of the new EU justice commissioner, Jean Claude Juncker's officials said Friday. (Photo: stumayhew)

The European Commission has played down suggestions that it had deliberately stripped the UK's commission candidate of responsibility for policing the EU's bank bonus rules.

Officials with Commission President designate, Jean-Claude Juncker, said that the decision to put bank bonus rules in the hands of the bloc's justice commissioner had been taken before Jonathan Hill, a British Conservative, had been nominated for the post of financial services chief.

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"This was a decision that was made when forming the justice portfolio," Juncker's spokeswomen Natasha Bernaud told reporters on Friday (26 September).

"This was a decision that was taken and made public on 10th September…so it's really nothing new," she added.

Under the proposed division of competences within the EU executive, Hill will be responsible for financial stability, financial services and capital markets. Aside from financial sector regulation, the portfolio will include the completion of the EU's ambitious banking union legislation.

Meanwhile, oversight of the bank bonus rules will be part of the portfolio of Czech politician Vera Jourova, the proposed justice commissioner, in the context of company law.

The UK is currently embroiled in a court battle with the European Commission over the bank bonus rules, one of three legal challenges to financial services rules that the UK has lodged with the European Court of Justice in the last three years.

The EU's institutions passed several laws aimed at curbing excessive executive pay in the 2009-2014 term, instigated by outgoing single market commissioner Michel Barnier.

Under the latest capital requirements directive adopted in 2013, bank bonuses are capped at the same level of salary, although banks are permitted to pay bonuses worth up to twice basic salary levels following a shareholder vote.

However, Bernaud stated that the capital requirements rules for banks will form part of Hill's portfolio.

The nomination of Hill, a former financial sector lobbyist and a member of David Cameron's cabinet, was a surprise move by Juncker after the UK prime minister had publicly opposed the Luxembourg politician's nomination as Commission president.

But Hill will still face a tough examination in the European Parliament on Wednesday (1 October) with the assembly's left-wing factions particularly sceptical of his candidacy.

Political group officials have suggested that Hill's nomination was a trap set by Juncker to ensure that UK Conservative MEPs, which dominates the Conservative and Reformist group of MEPs (ECR), endorse his Commission when deputies vote later this autumn.

In a statement on Friday (26 September) Gianni Pitella, the leader of the centre-left group, said that he had "obtained a promise from Mr Juncker on depriving Lord Hill of responsibility for overseeing financial sector pay and a commitment about continuing the reform of the financial sector."

In his written reply to questions posed by MEPs on the economic affairs committee, Hill indicated that he was not minded to defend the UK government's opposition to the bonus caps. "It is the Commission's policy to uphold the law…our institutions will defend the legislation in the normal way," he said.

"If a member state does not comply with EU rules, or tries to circumvent them, I will ensure that full use will be made of the various enforcement tools available."

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