Boris Upset Over EU Bonus Cap, Hedge Funds Braced For Curbs Too

Boris Johnson

London Mayor Boris Johnson lashed out at a European Union cap on bankers' bonuses on Thursday, warning that the move will shunt banking business away from the City of London and towards Zurich, Singapore and New York.

Reuters reports that bankers in Europe face a cap on bonuses as early as next year, following a provisional agreement in Brussels to introduce what would be the world's strictest pay curbs.

'People will wonder why we stay in the EU if it persists in such transparently self-defeating policies', Johnson said. 'Brussels cannot control the global market for banking talent, Brussels cannot set pay for bankers around the world'.

In the meantime, the news agency also reports that the EU's Alternative Investment Fund Managers Directive says 40-60% of a hedge fund manager's bonus must be deferred and no more than half can be paid in cash. The rest must be made up of units of their fund or an equivalent.

There is confusion about how the rules will apply in practice, with large gaps around the treatment of tax and dividends.

'It is potentially a massive concern if it all goes horribly wrong. But it is not yet clear (what might happen)', one industry executive told Reuters.

London mayor says EU bank bonus cap helps New York, Singapore

London's hedge funds brace for bonus curbs

image: © BackBoris2012

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