The UK Treasury may lift restrictions on bonuses to bankers
UK Treasury Secretary Kwasi Kwarteng is considering lifting restrictions on bonuses paid to bankers, the British Financial Times reported, citing sources in the minister’s inner circle.
Such a measure was introduced in 2014 as part of the EU Solvency II directive, adopted after the 2008 global financial crisis. According to this rule, the maximum amount of bonuses for bank employees in the United Kingdom can be only two salaries. Employees of American banks in the UK, who tend to pay large bonuses but relatively small salaries, have been most affected by this restriction.
According to Kwarteng, the lifting of the restriction could increase the popularity of London as a major financial center in Europe after leaving the European Union and attract more specialists to the country.
Previously, the refusal to limit premiums in banks was also considered by former British Prime Minister Boris Johnson, the FT notes. However, the politician postponed this idea for political reasons due to the brewing crisis in the country. Critics of the proposal, including Labor Party leader Cyrus Starmer, said at the time that it would lead to “increases in bankers’ pay and cuts in nurses’ salaries.”
Kvarteng is expected to present an emergency budget plan next Friday that includes tax cuts for the winter and energy support for the population. During this event, he may also announce the abolition of restrictions on bonuses to bankers, FT interlocutors noted. However, they also do not rule out a separate report on this measure.