first_img Share More From Our Partners Supermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse estatenypost.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Show Comments ▼ whatsapp whatsapp CITY OF LONDON CHIEF HITS OUT AT PAY RULES center_img by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryMoneyPailShe Was A Star, Now She Works In ScottsdaleMoneyPailTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastNoteabley25 Funny Notes Written By StrangersNoteableySerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesBetterBe20 Stunning Female AthletesBetterBeMagellan TimesThis Is Why The Roy Rogers Museum Has Been Closed For GoodMagellan TimesElite HeraldExperts Discover Girl Born From Two Different SpeciesElite HeraldHealthyGem”My 600-lb Life” Star Dropped 420 Pounds, See Her NowHealthyGem CITY of London policy chief Stuart Fraser has slammed new EU laws regulating bonus payments as “political point scoring” that will drive business out of Europe and destroy London’s status as a global financial capital.In his column for City A.M. today, Fraser, the chairman of the policy and resources committee at the City of London Corporation, says: “These laws will be amongst the most restrictive in the world… political expediency is placing our future international competitiveness at risk.” He adds: “London will remain the financial capital of Europe but what good is that if we cannot compete in the global marketplace?”The Committee of European Banking Supervisors – a body of European regulators including representatives from the FSA – approved its new rules on Friday, to dismay among finance workers.The rules forbid banks and other financial institutions from paying any more than 20 per cent of a bonus in cash up front and mandate that at least 50 per cent of the bonus must be in non-cash instruments such as shares.In addition, at least 40 per cent of the bonus must be deferred and paid over three to five years, with “clawback” clauses – whereby a bank can take back money paid to those later seen to have caused losses – made mandatory for key staff.For staff paid “a particularly high amount”, the rules stipulate that 60 per cent of the bonus must be deferred.The guidelines will now be examined by the FSA, which is due to release its interpretation of them in the next two weeks.Despite holding a public consultation on the rules, CEBS has made almost no changes to its draft guidelines published in October. PwC remuneration partner Jon Terry says: “European regulation of banking pay is now set to be the most stringent in the world… Other non-European regulators have shown little appetite for prescription, placing EU-regulated firms at a distinct disadvantage.”The rules also contain apparent contradictions: for example, they require regulators to consider the overall performance of an instutition in deciding whether a bonus is appopriate.Yet they also stipulate that institutions must pay bonuses “linked as closely as possible to the level of the decisions made by the staff member”.This means that if a junior staff member performs well, but the overall institution performs badly, it is not clear which fact should be considered more important in deciding the bonus.The guidelines are similarly unclear on the ratio between bonuses (“variable components”) and base salary (“fixed components”). Overall, they say: “It is not possible to decree one optimal relationship between the fixed and variable components of remuneration” and demands only that they must be “balanced”.But regarding “control function personnel” the rules stipulate that the best payment structure would “be weighted in favour of fixed remuneration” (towards salaries).The rules apply to employees of all banks head-quartered in Europe, including those working outside the EU, although City lawyers have said that it is possible some of the smaller City firms may escape on the grounds that they pose little sytemic risk. However, the UK has some of the most draconian pay rules in the world. Their scope will be dramatically increased in January when the number of firms to which the code applies jumps from 26 to 2,500.Alex Mizzi, employment lawyer at Dawsons, said: “The new code gives unprecedented power to the FSA over the internal reward and incentive structures of financial institutions.”And the EU rules could be in addition to any extra taxes imposed in the UK, such as the special 50 per cent bonus tax brought in by Labour. Chancellor George Osborne recently warned bankers to “look around you at the world you live in before you make your decision” on bonuses.There are also growing concerns about the personal tax impact of the rules: bankers whose bonuses are deferred might nonetheless have to pay the tax due on them up-front during the year in which they are awarded. This means that all the up-front cash that bankers receive as part of a bonus will go straight into the treasury’s coffers.City recruiters report that firms have already begun to alter their compensation schemes in response, paying more in basic salaries instead of bonuses. Recruiter Marks Sattin says it has seen a jump of 10-15 per cent in basic salaries since June. Sunday 12 December 2010 11:30 pm KCS-content Tags: NULLlast_img