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ARTICLE · 25 MARCH 2013

EU Cap On bankers' Bonuses

Charles Russell Speechlys LLP
Charles Russell Speechlys LLP
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Charles Russell Speechlys LLP

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A discussion on the facts and implications relating to the EU cap on bankers' bonuses.

United KingdomFinance and Banking
Bob Mecrate-Butcher
Bob Mecrate-Butcher

What we know

  • Agreement reached on 27 February by EU Committee on Economic and Monetary Affairs.

  • Core proposal that annual bonuses must not exceed annual salaries unless shareholders have approved a higher ratio of 1:2. If bonus is above 1:1, one quarter of the whole bonus to be deferred for at least 5 years.

  • UK Government will continue to strongly lobby against this.

  • If approved by Member States and European Parliament (vote expected 15 to 18 April), Member States will be required to bring in legislation to take effect by 1 January 2014.

Likely impact

This proposal is rightly recognised as a major political issue for the UK, particularly on the basis of its potential impact on London’s competiveness as a financial centre as against other world centres. Most eloquently, Boris Johnson is quoted as saying:

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