Barclays bankers set for bigger bonuses as EU attacks 'loophole'
European authorities are confronting the Bank over its relaxed approach to caps
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 07 February 2014
Brussels regulators are heading for a clash with the Bank of England over the way it is allowing City banks to get around its new bonus cap rules. The latest flashpoint emerged as Barclays was finalising controversial bonus hikes for its investment bankers despite having to tap shareholders for £6bn of extra funds.
The European Commission has ruled that banks cannot pay more than two times a banker's salary in bonuses. Officials hope this will serve to reduce the temptation for bankers to take risks that are dangerous to their banks and the financial system.
But Goldman Sachs in London, Barclays and HSBC are all proposing to get around the rules by offering a "role-based allowance".
Goldman is said to have had its scheme approved by regulators, as the allowance will be varied every month depending on the state of the economy. Barclays' proposed monthly allowance will be varied annually. Full details will be published before a shareholder vote on the scheme at its spring annual general meeting.
However, the commission is clearly concerned that this is merely a bonus by another name, and has demanded an explanation from the banks' Prudential Regulatory Authority over how it can approve them. An official told Reuters the commission had demanded the European Banking Authority watchdog "take a strict approach" when demanding answers from the PRA.
Given the British Government's opposition to the caps, analysts said the commission was suspicious that UK regulators were taking a relaxed approach to banks' proposals.
A spokeswoman for the EU financial services chief, Michel Barnier, said: "One would expect banks to interpret this in a common sense and straightforward way without trying to circumvent it by including in fixed remuneration elements which actually vary in level."
Barclays is to offer bonus rises for its staff above the £1.854bn pot paid out last year. Although sources denied reports it would be as much as £2.4bn, it is expected that deals would be more generous.
News of the bonus pots came just days after its chief executive Antony Jenkins turned down a bonus of up to £2.75m for the year.
Mr Jenkins said he had taken the decision due to the historic "litigation and conduct issues" at the bank. However, Barclays sources said the bank had to continue paying top dollar to its investment bankers or face an exodus of its best "rainmaking" bankers.
With investment banks and hedge funds expected to begin hiring more staff during this year, banks say they are feeling renewed pressure to turn up the bonus taps.
- 1 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should convert and not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...