The EU is thumbing its nose at George Osborne over bankers' bonuses

Pay is reportedly being removed from Lord Hill's finance commissioner brief, as the EU clamps down on 'allowances'.

by Rachel Savage
Last Updated: 26 Nov 2014

City denizens will be rolling their eyes at the latest salvo from the EU targeting bankers’ bonuses, while rolling up their sleeves to come up with yet another way of getting around whatever ham-fisted legislation or regulation Brussels fires across the Channel next.

Britain’s EU commissioner Lord Hill won’t be overseeing pay as part of his finance brief, European Commission president Jean-Claude Juncker said in a private meeting, according to anonymous sources cited by the FT.

The highly political move is designed to placate Socialist and Green MEPs threatening to veto Lord Hill’s appointment, for fear he will sing to the City’s tune. It comes as the EU’s banking watchdog moves to clamp down on so-called allowances, designed to get around the bonus cap (100% of fixed pay or 200% if shareholders approve).

It’s another blow to George Osborne, who was outvoted 26-1 on the bonus cap last year and is currently fighting it in the courts. He’s claiming limiting bonuses is actually a risk to financial stability, saying it gives banks ‘peverse incentives’ to increase fixed pay.

Green bloc leader Philippe Lamberts said, ‘It is quite obvious that trusting [the bonus cap] to Jonathan Hill would practically mean trusting it to George Osborne, who is adamantly opposing it.’

But try as lefty MEPs might to clamp down on bankers’ pay, it is inevitable the City, where the vast majority of Europe’s high paid bankers work, will find another way to get around any limit on allowances. As FT columist Jonathan Guthrie put it, ‘European regulators cannot define the practice they oppose... easily. The result will be a rolling semantic argument over what a "bonus" is.’

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