Daily Archives: December 17, 2010

A cloud is hanging over one of the government’s biggest privatisationsRead more >>

Jim Pickard

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:

CRD3 Briefing

CEBS Guidance on Remuneration Provisions in the Capital Requirements Directive

Summary

  • There are two issues at play in the various press reports covering the CEBS guidance on the CRD3 remuneration provisions: (i) the current interpretation of the upfront cash limit provisions and the tax implications of retention conditions; and (ii) the exaggeration of provisions that relate to state assisted banks and fixed/variable pay ratios.

Upfront Cash and Retention Conditions

  • The provisions in CRD3 imply a cap on the maximum proportion of a bonus that can be paid in cash upfront.
  • These provisions are open to interpretation and throughout the negotiation and implementation of the Directive, we have supported an interpretation that limits upfront cash to 40% of a total bonus. This interpretation is consistent with the G20 agreed FSB Standards.
  • The European Parliament has taken a different view and interpret the provisions as imposing a 20% cap. This will go beyond the globally agreed position and will have a significant impact on the European financial services sector’s international competitiveness.

 Read more >>

Jim Pickard

If all low-carbon energy is given a public subsidy then has nuclear power been subsidised? You might have thought so.

But Chris Huhne insisted yesterday that this was not the case. Read more >>

Jim Pickard

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.

One can only wonder then what the energy secretary made of today’s Times headline saying: “Electric bills will double by 2030 to fund new generation of nuclear power stations.” (page 25) Read more >>

Jim Pickard

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.

As George Parker reports: Read more >>