Bank’s Executive Compensation to Reignite UK-EU Row

The Bank of England remained on collision course with Europe over the bonus cap as a consultation was launched that would rule out the use of top-up payments to side step the clampdown on City pay.

The European Banking Authority ruled in Ocotober that these extra payments should be regarded as variable components of pay, like a bonus, and that banks using them are breaching the ratio set out by the EU to limit bonuses to one times salary or twice if shareholders if approve.

The pan-European banking regulator has begun a three-month consultation that would turn this opinion into formal guidelines. All banking regulators in the EU would then have to comply or risk being taken to the European court of justice.

But the Bank of England’s Andrew Bailey has spoken out against the bonus cap, saying it forces up fixed pay. There is no evidence that his views have changed. The UK’s major banks are among those using these allowances as third payments alongside salaries and bonuses.

Jean-François Gerard of law firm Freshfields said: “Not much has happened since the October opinion so apart from the peer pressure, the only way to force countries to act on allowances would be the [European] commission-led breach of EU law procedure which is highly unlikely.”

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza