European Regulator Widens Scope of Banker Bonus Caps, PwC SaysAmbereen Choudhury
The European Banking Authority approved a plan that will “significantly increase” the number of bankers whose bonuses are capped under European Union rules, accounting firm PricewaterhouseCoopers said.
Anyone earning more than 500,000 euros ($641,250) will be deemed a “risk-taker irrespective” of their role at the firm,” PwC said in an e-mailed statement today. The proposal will increase the number of employees subject to bonus caps by as much as 10 times at some investment banks, the accounting firm said. A spokeswoman for the EBA in London wasn’t available to comment.
The EU brokered a deal in February to outlaw banker bonuses that are more than twice fixed pay, a move lawmakers said would prevent excessive payouts and curb irresponsible risk-taking. U.K. Chancellor of the Exchequer George Osborne opposed the curbs, saying they would harm the competitiveness of the nation’s finance industry.
“This expansion of the definition of risk takers will see substantially more individuals working in the banking industry being hit by tougher pay rules, including being subject to bonus caps from next year,” PwC partner Jon Terry said in an emailed statement today.
Amy Tiernan, a spokeswoman for PwC in London, said the proposals will be published in a consultation within the next week. Following a meeting yesterday, the EBA pushed back the next round of banking stress tests until 2014.
Financial-services firms have been under pressure from regulators and the government to cut compensation amid public anger over the bailouts of Britain’s Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.