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
PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
John Terry, Frank Lampard
footballChelsea captain sends signed shirt to fan whose mum had died
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world