This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-21661089

The article has changed 13 times. There is an RSS feed of changes available.

Version 10 Version 11
Osborne: UK will not back bonus cap Osborne stands alone as EU backs bonus cap
(about 1 hour later)
  
Chancellor George Osborne has told European Union finance ministers that he cannot support proposals to curb bankers' bonuses. Chancellor George Osborne stood isolated after European Union finance ministers vowed to press on with proposals to curb bankers' bonuses.
At a meeting of the EU's href="http://www.consilium.europa.eu/policies/council-configurations/economic-and-financial-affairs.aspx" title="Link to Ecofin page" >Economic and Financial Affairs Council in Brussels he appealed for further negotiations. He told a meeting of EU finance ministers that he could not back the plans, which he fears could damage London's financial centre.
The meeting discussed a possible "tweaking" of plans to limit bonuses to 100% of a banker's annual salary, or to 200% if shareholders approve. The EU is proposing to cap bonuses to 100% of a banker's annual salary, or to 200% if shareholders approve.
The City of London fears the rules will drive away talent and restrict growth. There will be further talks, but ministers will now finalise details.
Most members of the 27-nation EU are firmly behind the proposals, which are part of wider measures requiring banks to strengthen their capital buffers in the hope of avoiding another financial crisis.
The proposals still need formal approval from the European Parliament and EU states.
Speaking after the meeting, Mr Osborne said Britain already had the toughest regime in Europe for bankers' pay and bonuses and that a cap could "have a perverse effect".Speaking after the meeting, Mr Osborne said Britain already had the toughest regime in Europe for bankers' pay and bonuses and that a cap could "have a perverse effect".
Although ministers could still push through the proposals without the UK's support, German Finance Minister Wolfgang Schaeuble said ``it would be better'' to reach consensus. He said after the meeting: "I cannot support the proposal currently on the table."
But Michel Barnier, the EU commissioner for the single market, said high bonuses were behind excessive risk-taking by bankers. "Enough is enough. We've got to put a stop to that." The City of London fears the rules will drive away talent and restrict growth.
Mayor of London Boris Johnson has dismissed the idea as "self-defeating". London is the EU's largest financial centre. German Finance Minister Wolfgang Schaeuble said "it would be better'' to reach consensus with the UK, and further negotiations would take place.
On Monday, a spokesman for Prime Minister David Cameron said: "We continue to have real concerns on the proposals. We are in discussions with other member states." But Michael Noonan, Ireland's Finance Minister and chairman of the meeting, said ministers would begin finalising technical details ahead of a vote next month.
Mr Osborne is concerned that the bonus cap could push banking business, and its brightest talent, away from Europe and its largest financial centre, the City of London. The bonus proposals are part of wider measures requiring banks to strengthen their capital buffers in the hope of avoiding another financial crisis. The measures need formal approval from the European Parliament and EU states.
So the UK is calling for flexibility, but it is struggling to find allies. Countries that often agree with the British position on financial services - countries like Sweden, the Netherlands and Germany - support this deal. Michel Barnier, the EU commissioner for the single market, said high bonuses were behind excessive risk-taking by bankers. "Enough is enough. We've got to put a stop to that."
Tuesday's discussion will be followed by a formal vote in the European Parliament in May, and the cap on bankers' bonuses looks set to become law next year. But the Mayor of London, Boris Johnson, has dismissed the idea as "self-defeating". London is the EU's largest financial centre.
That would mark an extremely rare defeat for the UK on financial legislation in Europe, a real break with how things have traditionally been done.
However, Mr Osborne's bargaining power may be weakened further by Switzerland's recent decision to cap bonuses paid to bankers and give shareholders binding powers over executive pay.
Some EU ministers have looked with approval on the Swiss move, made in a national referendum on Sunday.
"The Swiss often show the way and personally I think we should take inspiration," said French Prime Minister Jean-Marc Ayrault.
Speaking just before Tuesday's finance ministers' meeting, Irish Finance Minister Michael Noonan said there seemed little prospect of Mr Osborne winning over his eurozone counterparts.
"There is very little further that we can do for them (the British)... There isn't really any more room left," he said.
Late on Monday, France's Finance Minister Pierre Moscovici said the deal would not be renegotiated.
"Everyone must live with what is on the table," he told reporters after a meeting of eurozone finance ministers in Brussels. "I told George Osborne, when I was in London, these moral rules apply to everyone, even the City."
'Unintended consequences''Unintended consequences'
Simon Lewis, chief executive of the lobby group the Association for Financial Markets in Europe, said the proposed measures were not just a threat to the City of London, but to Europe's competitive position in financial services.Simon Lewis, chief executive of the lobby group the Association for Financial Markets in Europe, said the proposed measures were not just a threat to the City of London, but to Europe's competitive position in financial services.
He told the BBC: "If this goes ahead, you will see the law of unintended consequences. Salaries will go up, there will be less flexibility, and the banks will be less competitive."He told the BBC: "If this goes ahead, you will see the law of unintended consequences. Salaries will go up, there will be less flexibility, and the banks will be less competitive."
Last week the Federation of European Employers questioned whether restrictions on bankers' pay exceeded EU powers.Last week the Federation of European Employers questioned whether restrictions on bankers' pay exceeded EU powers.
There has been speculation that the UK may try to invoke a little-used "national interest" defence to block attempts to curb bonuses.There has been speculation that the UK may try to invoke a little-used "national interest" defence to block attempts to curb bonuses.
The so-called "Luxembourg Compromise" allows a member state to block a majority decision being taken if an issue is deemed to seriously affect "a very important national interest".The so-called "Luxembourg Compromise" allows a member state to block a majority decision being taken if an issue is deemed to seriously affect "a very important national interest".
Some banks have reportedly taken legal advice on whether the EU's proposals are within the law, according to the The Financial Times on Tuesday. One bank had already received legal opinion that the bonus measures contravened European law, the FT said.Some banks have reportedly taken legal advice on whether the EU's proposals are within the law, according to the The Financial Times on Tuesday. One bank had already received legal opinion that the bonus measures contravened European law, the FT said.
Mr Lewis told the BBC that he "was sure" lawyers would be looking at whether the proposals were lawful, but added that "these are early days".Mr Lewis told the BBC that he "was sure" lawyers would be looking at whether the proposals were lawful, but added that "these are early days".
The European Commission has said that it is confident the proposals are legally watertight.The European Commission has said that it is confident the proposals are legally watertight.