CITY banks yesterday refused to publicly attack EU plans to limit their bonus payments for fear sparking a backlash, despite the intervention of Mayor of London Boris Johnson.
Leading banks and industry organisations contacted by City A.M. put up a wall of silence, even though many privately expressed concerns that limiting bonus levels at double annual pay will damage London’s status as a global financial centre.
The Treasury is understood to have instructed some trade organisations to remain quiet and avoid attracting adverse publicity while the issue is debated in Brussels.
On Monday, Mayor of London Boris Johnson told City A.M. that “we don’t need Europe butting in” on the issue but no other politician has been willing to make a public stand for London’s financial sector.
The CBI’s Katja Hall expressed concern that regulating bankers’ wages “could be the thin end of the wedge”. She fears Europe would be tempted to “expand this legislation to apply to businesses more generally”, damaging investor confidence and economic growth.
Dr Roger Barker of the Institute of Directors said there was some need for pay restraint but the EU’s approach to remuneration policy is “excessively rigid and prescriptive. This is a clear example of regulatory policy that would be better designed and implemented at national rather than EU level,” he added.
MEPs are also considering making the EU’s biggest firms report finances on a country-by-country basis. Lawmakers want this to be added to new banking regulations, seizing the moment to add to the burden on lenders. Banks do not currently break down their finances in such detail.