A senior legal advisor at the European court of justice has rejected a claim by the British government that an EU law capping bankers’ bonuses is illegal.
Niilo Jääskinen, one of the ECJ’s advocate generals, has recommended upholding the EU law on bankers’ bonuses that restricts payouts to 100% of a bankers’ salary, or 200% if shareholders grant their approval.
Although his opinion is not binding and a final verdict will not be published until next year, the judgement is a blow to the chancellor George Osborne, who has been trying to overturn the EU bankers’ bonus cap.
The Treasury has argued that the EU overstepped its remit by legislating on bankers’ bonuses and imposed the law in a rushed way without any assessment of its impact. A spokesperson said on Thursday that the government was considering the opinion and its implications in detail.
Jääskinen dismissed all these arguments in an opinion that said European regulators had the legal authority to introduce the cap and had not infringed UK sovereignty. He also argued that it was wrong to characterise the bonus restrictions as a cap on pay, because basic salaries were not fixed.
A final judgment from the court is expected by early February, just as thousands of bankers in the City are waiting to hear how much their bonus cheques will be worth.
Since the bonus cap was introduced, banks have sought to get around the restrictions by paying their top staff special cash allowances, which are not categorised as basic pay or bonus. But last month, the top European banking regulator warned banks against paying senior staff top-up payments to get round the bonus cap. The European Banking Authority said the payouts were breaching the bonus cap and should be stopped.
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