Bankers warn EU curbs on pay will hurt the City

HSBC’s chairman warned that the European Union's clampdown on bankers' pay would damage the City of London and Britain's economy, weakening both against competitors in Asia and the US.

Stephen Green also said that it would be wrong to break up the banks and that there was no connection between "the size of banks and failure". He added that London has now lost its leading position as the world's most competitive financial centre, with New York now equal, and Singapore and Hong Kong rapidly catching up.

And in a clear warning to the Government and the EU, he said: "That competition should focus minds. There are real risks both to London and to the economy as a whole from the law of unintended consequences if all those involved do not think very carefully about the policy framework and its implications."

On the subject of pay, Mr Green added: "The European Parliament's proposal on remuneration is a very clear example which raises questions about international co-ordination. It is a broadly sensible proposal, although aspects of it are still unclear.

"But if very different regulations prevail in the US, Switzerland and Asia, then it risks providing real incentives for a mobile population to arbitrage the rules to London's – and therefore the UK's – disadvantage," he added.

Mr Green further attacked the proliferation of levies and taxes around the world: "The current array of proposals is striking in its lack of consistency in terms of amounts, duration, basis of calculation and ostensible purposes. In the absence of global co-ordination, banks face distortions and could end up facing overlapping national and regional requirements that could result in double taxation."

He rounded on those who believe that the biggest banks – such as HSBC – are too big to fail and should be broken up with investment banking separated from retail banking.

"In one sense all banks are too big to fail. You can't put retail depositers into bankruptcy as you would a failing business. There is no correlation between size and failure. There is no model that is the right one," Mr Green said.

He argued that in fact "there is a real case for saying you need different types of model. Living wills have a role to play but small banking is not better than more mixed banking."

Mr Green added that while the economy is emerging from the financial crisis, it could be at risk of another shock. He was speaking after Angela Knight, the chief executive of the British Bankers' Association (BBA), who expressed similar sentiments. She said banks were an "easy target". "The blame game has gone on far too long. The time has come for a more measured and serious debate."

Mrs Knight said of efforts to reform banking: "What looked coherent 18 months ago is less so today. Even in quiet times, this is akin to three-dimensional chess, but today it is even more complicated than that as countries begin to peel off and do their own things."

She added: "The EU appears to be applying local requirements on an international industry. This is not about pin-striped individuals heading for a jumbo jet to Geneva. It is about shifting a significant amount of business out of the region."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Account Manager / Membership Manager

£35 - 38k + Benefits & Bonus: Guru Careers: We are seeking an Account Manager ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Guru Careers: Associate Director

£50 - 80k: Guru Careers: We are seeking an Associate Director for the Markets ...

Guru Careers: Associate Director / Director of Sound Practices

£60 - 100k: Guru Careers: Our client is looking for an Associate Director of S...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks