The Treasury is to clash with the European Union in a last-ditch effort to overturn a draconian cap on bankers’ bonuses, arguing in Europe’s top court that rules limiting rewards are an unjustified intrusion.
The Daily Telegraph reports that government lawyers will on Monday lay out objections to the rules, which have been widely criticised by those in the City who argue it puts London’s financial sector at a disadvantage to New York’s and Hong Kong’s.
As part of a systematic overhaul of EU banking rules designed to stabilise the financial system, bonuses are being capped at 100% of banking salaries, or 200% with shareholder approval.
The Treasury has opposed the move on the grounds that it is an overextension of the EU’s remit, and does not contribute to improving financial safety. The bonus cap is seen as among the most damaging of a number of Brussels diktats on the UK’s financial services industry. The Treasury said the rules could “undermine financial stability”.
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