UK Treasury mulls scrapping EU cap on bonuses for City bankers
The UK Treasury is reportedly considering scrapping an EU cap on bankers’ bonuses in a bid to keep the City competitive post-Brexit.
The UK is now free to set its own regulatory agenda on financial services, with divergence from EU rules expected.
The Financial Times reports that one potential change could be removing an EU regulation that limits banker bonuses to 100 per cent of their salary in most cases.
The regulation limits UK bankers’ bonuses to the amount of their base salary or to a maximum of double their salary with explicit shareholder approval.
It comes as the EU ramps up its assault on Canada as it tries to attract financial services business away from the UK.
Amsterdam surpassed London as the largest share trading centre in January in the wake of the UK’s exit from the EU’s single market and customs union.
The financial services sector, which is worth £130bn a year to the UK’s economy, lost its previous EU-wide access at the end of the Brexit transition period on 31 December.
It is now unlikely the EU will restore previous access to the UK’s finance firms, in a process called equivalence, as Brussels believes the UK will diverge from its regulatory regime for financial services.
Tory MP, and chair of the All Party Parliamentary Group on Financial services, said yesterday that this provided a new opportunity for the UK to set its own rules and compete directly with the EU.
“With Brexit complete – and many regulatory powers returning to the UK for the first time in decades – it is crucial that we now get the new framework for financial services regulation right,” he said.