Financial News
- 1 March 2013, 9:45
Banker Bonus Cap Is 'Deluded', Says Boris
The Mayor of London has launched a stinging attack on European Union officials after they agreed a provisional deal to cap bankers' bonuses.
The plan would see the maximum payout set at a year's salary but that could be increased to two years' salary with shareholder approval.
The Treasury opposed the idea because it feared that limits could cost jobs in the City and prompt firms to leave for more favourable shores.
Boris Johnson said: "This is possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman Empire."
He warned that it would play into the hands of the City of London's overseas rivals, while undermining support for the EU in Britain.
"People will wonder why we stay in the EU if it persists in such transparently self-defeating policies," he added.
Speaking in Latvia, David Cameron said that any regulation must be flexible enough to allow UK-based banks to compete and succeed.
"We need to make sure that regulation put in place in Brussels is flexible enough to allow those banks to continue competing and succeeding while being based in the UK."
The measures are part of a sweeping overhaul of EU banking rules, which are designed to ensure that banks in the future have enough capital to withstand financial shocks.
Wednesday night's agreement, reached during an eight-hour session between EU lawmakers, the EU Commission and representatives of the bloc's 27 governments in Brussels, ensures the package can take effect next year.
Currently there is no legal pay limit on top bankers and traders, who can earn performance bonuses many times their base salaries.
But public outrage has grown across Europe over large payments to executives of banks that received huge state bailouts during the financial crisis.
Supporters of the bonus cap say the payments encouraged bankers to take massive risks at the expense of the long-term future of their businesses, which helped to destabilise the financial system.
Othmar Karas, the European Parliament's chief negotiator, said: "For the first time in the history of EU financial market regulation, we will cap bankers' bonuses.
"The essence is that from 2014, European banks will have to set aside more money to be more stable and concentrate on their core business, namely financing the real economy, that of small and medium-sized enterprises and jobs."
Final approval by parliament and government leaders of the package is expected to be a formality.
Britain had tried to rally other EU governments behind its position but failed to garner enough support.
what do you think?
Russell6730
This is the news we've all been waiting for but no thanks to Cameron and his gang of liars and self servers.Ever since the astronomical bale out of the banks at the start of the recession he's sympathised with the electorate and agreed that something must be done to stop tax payers money ending up as Xmas gifts to greedy bankers. Now the EU has done just that Cameron and his gang voted against it,he has been smoked out, he has sided with the banksters all along. All this bovine excretia about the banks pulling out and going abroad is just that, their greed for the electorates money will keep them in the city just as long as Cameron feeds their insatiable appetites one way or another with our money.
Eric Coster
This Gov puts too much faith in the Money markets, invest in people, Educate, train and employ. They will then spend money on things we make, grow or invent. Tax and Sack is not the only road out of this mess, look at China!
Russell6730
Well said Eric....Britain doesn't own Britain anymore we once led the world in manufacturing and innovation now we make hardly any thing and what we do is mainly owned by foreign interests. Its a sad day that we have to rely on city crooks and spivs to keep Britain solvent.
blue side
Sorry but I am missing something here - the banks are legal persons (i.e. companies) they are not government departments. Whilst people may make claims about bonuses they do so without any understanding of what the job(s) entails. It must also be said that on the face of it some do not deserve any bonus but if I was managing a +10 Billion port folio successfully I would want more than 30,000 a year. So what in heavens name has it to do with government / the EU this is a matter for the share holders (members) of the company. If government wants control then let them takeover the banks and then they could mess them up as well
David Francis
I doubt that your post will be popular but you are absolutely right. Furthermore (& on a slightly different angle), it is this sort of intrusion into areas which are of no concern of the EU that makes this institution so unpopular with the general British public. We do not like this prescriptive approach to legislation.
Micheal Booth
Well said blue, you are so right. People are not educated enough to understand how Banks work and only see the Media induced anti-bank hysteria! And David I agree, it will not be popular!
gordon
Blue Side. I whole heartedly agree with your post and with David Francis and Michael Booth. People voting against you are those that want the government to spoon feed them. I would like to see less government. I know a lawyer who works in the financial industry and works on average 16 hours a day and sometimes 7 days a week. Does anybody think they would do that for £30,000 a year?
David Wragg
I agree with all four of you. The EU is anti-Anglo Saxon and jealous of London's position as a global financial centre. They are also pandering to the poorly informed majority. You posts won't be popular, but that doesn't make them wrong.
blue side
Thanks guys I do however wish those who vote thumbs down would have the ability to post a constructive comment. As for our banking system there are many in the EU area who would love London to collapse and if it did I wonder what the thumbs down brigade would then say as their money and investments collapse?
neil
If they are not government dept`s but private companies, why are they not allowed to go bust like any other private company in the UK, they come crying cap in hand and the govt bails them out, do you think that if you were in business and you were failing the govt would give you billions to help you out, without expecting any return, or being satisfied with less than what they gave you, while all the time you continued to commit fraud and paid yourself millions ?
happymike CHESTER
This comment has been removed for violations of our Terms and Conditions.
adam
The Labour government did exactly that with the motor industry Neil,because thousands of jobs depended on it and it was exactly the same with the banking industry. Sure they made mistakes,just like we all did by living way out of our means and borrowing money and having huge mortgages that were totally unrealsitic and ,to be honest,i think that in certain circumstances if it happened again then the government of the day should probably let banks in trouble just go out of business,but if this causes us to lose revenue due to business in our most competitive going abroad then how is that good for the country?
neil
so you think 5 years of recession caused by these greedy bankers has been good for the country Adam ? even still after they mess the whole world up they carry on defrauding everybody with interest rate fixing trying to milk as much as they can, Let them go, we put way too much emphasis on just the banking sector of this country, there is plenty of other great people in the country too, and by the way, I didnt live beyond my means, I didnt get a massive mortgage I couldnt afford, and I`m not upto my eyes in debt, so no, we didnt all make the same mistake, but everybody is paying for it all the same, thats where the resentment comes from
Martin Peacock
Too little, too late.
ali baba
If bonuses are capped they will just increase their wages instead.
John Wood
Why pay bonuses, take a job at the salary offered, if you're good at it ask for a raise, if you're not then be prepared for the consequences.
Phil A
OMG now we are really screwed. Allowing the EU to meddle in the banking system will result in an even bigger catatrophe.
blue side
Phil you are a bit out of date why do you think we have so much corporate legislation and H&S they may as well try their hand at this - its easier than sorting out the mess they have already created :-)
Name witheld
This comment has been removed for violations of our Terms and Conditions.
david nicholls
OMG .NO way should they get anything .They caused the sump ,ALL the bankers should pay for it . If they leave England ,thank God .I dont trust banks at ALL tHEY ARE JUST A DISEASE om mankind.
gordon
No they didn't cause the crisis. It was the regulator. The regulator told the banks both here and in US that property prices would never collapse and encouraged the banks to "wrap" the mortgages and sell them. When the property prices collapsed the banks were left holding the baby
blue side
Have no love of banks but not suer you are 100% correct in your assumption people forget that the US played a large part in the toxic debt problem - you know them 'the worlds perfect nation'
Adam Green
I think they should introduce a law so that EU officials and MP's should only be paid a maximum of twice what they are worth. That would save billions
Phil A
We might even get a refund.
Adam Uprichard
Business is business. Stop moaning, they are private money making organisations. In short, if you don't like them, don't buy from them. Or go and live in a communist state like china. Quite frankly the naivety of some people here astounds me.
Mary Silvestre
Adam - China is better at capitalism than the UK - which is why China is the biggest exporter in the world and has a GDP that will shortly take over that of the US
bobh_385
The only reason China has been doing so well is the very low wages paid to the workers.Now that is changing and western companies are now looking at returning production to Europe.Plus the quality of goods coming out of China is poor so their bubble will soon burst
chrishearn350
Well Adam when things go wrong they should rely on private money to rescue them not the Tax payer ! Business is Business after all !
Mary Silvestre
Of course Boris and Dave and Ozzy are against this cap - they don't want to see all their mates from school and UNi 'starve' And of course the City gives thousands to the Tory party so no vested interest there. What I don't understand is why do bankers have to be paid zillions in order for them to stay here and do their jobs? Let them go if the wage isn't enough. Then you, me and anyone else would do the job. It's not as if they are 'experts' anyway - they caused this recession with their gambling.
mick_salt
I'm prett sure they don't give money to the Tory party, Mary. They do collectively , however, put countless millions in to the state purse in the form of tax.
happymike CHESTER
Well done E.U. our politicians in Britain have put all the eggs in one Basket the Bankers will be our saviours destroying our industry and millions of productive peoples lives .We the people never seen the benefits only the drudgery of low pay long hours.All money made going to the 1% in overseas accounts. NOW it has gone wrong we the people have to pay for their GREED.
dave
Boris is a very, very dangerous person. There is only one group of people in this country that Boris is bothered about....his bankers.
happymike CHESTER
Now we know the dark side of clown Boris ,a UKIP leader in the making.
IRONSTINE
the tories used to scream about the miners holding the country to ransom, they were after a decent wage, the bankers and energy companies for some reason are treat with ooh's and empty actions promised at a future date
andrew
I don't have a problem with capping Banker's bonuses but why should the EUSSR decide what's best? Our own Parliament should make the necessary legislation, not a bunch of unelected nobodies.
chrishearn350
Boris Johnson said: "This is possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman Empire." Arr Boris but the Romans did fix their interest rates to protect their economy, and on the brink of a triple dip recession where is all that money coming from? could it have been sucked out of the world economy ? must be many billions by now !
johnnydee23
Boris says regulations are deluded, well so is he!
shaun spencer
6:40am on 28/2/2013
Still far too much.in fact its grotesque in this financial reccession.theyve all failed.its not just bankers is it neither.next were be hearing thst the chairman of british gas is getting 1000s of thousands of christmas bonus and how will have earned it. By charging customers overpriced fuel tariffs.taking from the poor to give to the rich is the motto of this reccession.