A cloud is hanging over one of the government’s biggest privatisations.
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This may come as a surprise to those who read Nick Clegg’s comments today about the need to crack down on bankers’ bonuses. (And David Cameron’s veiled threats today of a higher tax on banks that don’t comply).
Yet last week coalition MEPs were sent a document on how Britain has been seeking to water down a EU rule intended to restrict bonuses in the future.
The EU last Friday laid out its new rules meaning that no senior banker should get more than 20 per cent of their bonus in cash upfront.
The EU wants bankers to defer half of their bonus, of which at least 60 per cent will have to be paid in shares or other financial instruments.
The British (via FSA policy set out in the summer) had argued that banks should be allowed to give all of the cash element upfront while mostly deferring the shares element. That would have meant bankers getting 40 per cent of their bonus in cash upfront – double what the EU wanted.
The document argued that Britain “led the way” in implementing G20 principles and that the EU should not go any further.
It was an entirely valid point of view to take; but there is a distinct irony in the idea of the British government proposing weaker restrictions than the rest of the EU while posing as banker-bashers.
The document is a bit long but here you go:
CEBS Guidance on Remuneration Provisions in the Capital Requirements Directive
Upfront Cash and Retention Conditions
Chris Huhne yesterday’s dismissed a Telegraph splash – predicting a 42 per cent rise in bills – as “ludicrous”, as I reported on this blog. Decc’s own predictions are for a real terms rise of about 32 per cent by 2030 (from £500 to £640 per household) which you might argue is quite similar.
Today the FT has splashed on the deputy prime minister warning bankers to show restraint during bonus season for risk of a public backlash. The government would not stand idly by if this failed to occur, Nick Clegg warned.
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