Douglas Flint, chairman of high street bank HSBC, has criticised EU rules that will cap bankers’ bonuses at twice their fixed pay, claiming they are a “retrograde step” that could make it difficult for banks to hire staff.
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The EU has stated that bonuses paid at banks can amount to no more that twice the banker’s fixed pay, warning that the rules could be restructured after some banks introduced new allowances to meet the new rules. The rules aim to improve accountability and reduce risky behaviour but banks said previous rules could have achieved this.
Speaking to the House of Lords EU economic and financial affairs sub-committee, Flint said, “The proposals in terms of capping the ratio variable to fixed (pay) is a retrograde step against long-term deferral.
“Hopefully, we’ll find a balance over the coming months and years to readdress that, because it’s terribly important we have a balanced framework that protects the system from excessive risk taking, which deferral and clawback does, but as the same time isn’t so uncertain we find it difficult to attract people into the industry.”
Flint also said that he was “disappointed” in the EU for imposing remuneration regulation on subsidiaries outside of the EU if their headquarters are located within in the union. Banks have argued that such measures will place them at a disadvantage when competing with their rivals.
Since the financial crisis, bankers’ remuneration packages have been debated and called into question. In March, the Bank of England warned that misbehaving and irresponsible bankers could be forced to pay back their bonuses up to six years after they were paid out.
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