EU may exempt small banks from cap on bankers' bonuses

http://www.theguardian.com/business/2016/mar/01/eu-exempt-small-banks-cap-banker-bonuses

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The European Union’s executive is looking at whether to exempt smaller banks from the bloc’s cap on bankers’ bonuses, its financial services chief Jonathan Hill said on Tuesday.

Responsibility for banker pay was carved out of the Briton’s portfolio when he took up the job in Brussels and handed to EU justice commissioner Vera Jourova.

“It is the case that my colleague Madame Jourova is looking at the question of the bonus cap from the point of view of proportionality, and whether in future it would make more sense to be applied in a uniform way to all kinds of sized credit institutions, or whether it makes indeed more sense to apply it proportionally,” Lord Hill told the Treasury select committee.

He said he would not have backed a cap as clawbacks and deferrals of bonus payments were more sensible.

The cap limits bonuses to no more than fixed pay, or twice that amount with shareholder approval, and was passed into law before Hill took office.

He was speaking after the Bank of England and the Financial Conduct Authority said they would not apply the cap to all banks, raising the possibility of EU enforcement action.

Britain is against capping bonuses, arguing it has pushed up fixed pay, making banks less nimble in cutting costs in a downturn, but was outvoted.