Britain says it won't support banker bonus cap
- Article by: JUERGEN BAETZ
- Associated Press
- March 5, 2013 - 5:38 AM
BRUSSELS - Britain's treasury chief says his country does not support the proposed European legislation on capping bankers' bonuses.
George Osborne said at a meeting of European Union finance ministers in Brussels on Tuesday that Britain, home to one of the world's largest financial industries, wants further negotiations.
Most European nations support the legislation, which would limit bonuses to one year's base salary and double that if a large majority of the bank's shareholders agreed. It could be passed by qualified majority, without Britain's consent.
German Finance Minister Wolfgang Schaeuble said "it would be better" to reach consensus.
He expressed hope that changes in technical details might yet convince Britain to support the measure, which is part of a wider package of financial laws requiring banks to strengthen their capital buffers.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
European Union finance ministers were expected Tuesday to give wide political approval to capping bankers' bonuses, with Britain being the only country of the 27-nation bloc staunchly opposing the measure, diplomats said.
Britain's treasury chief, George Osborne, faced an uphill battle in the debate in Brussels because the package of financial laws that includes the bonus cap could be passed by qualified majority, without Britain's consent.
Under the proposed legislation, agreed with the European Parliament last week after months of arduous negotiations, bankers' bonuses would be limited to one year's base salary, and double that if a large majority of a bank's shareholders agreed.
On his way into the meeting, Irish Finance Minister Michael Noonan said it was possible to include some of Britain's demands during the negotiations, but that the deal was now done. "There's very little further we can do for them," he said.
The finance ministers won't hold a formal vote until next month because technical details of the law package must still be finalized, but EU officials said they expect Tuesday's meeting to yield broad political backing.
The British government has said it fears the bonus cap could harm the financial sector in London, one of the world's largest, and hamper growth. Proponents of the cap say the high payments encouraged bankers to take massive risks at the expense of the long-term future of their businesses, which helped to destabilize the financial system.
Some countries, like the Netherlands, sought even harsher restrictions, proposing to cap bonuses at only a fifth of the annual base salary.
Two EU diplomats separately said Friday that Britain had been isolated in a meeting of the 27 governments' representatives in Brussels last week in opposing the bonus caps. They spoke on condition of anonymity because of the sensitivity of the issue.
While overruling Britain on the matter is technically possible, it is considered to be a politically toxic move, especially given the already significant level of euro-skeptical sentiment in the country. Conservative Prime Minister David Cameron has vowed to renegotiate his country's ties with the EU and hold a referendum on Britain's membership in a few years.
The bonus cap is part of a package of financial laws that would require banks to hold more capital and liquidity reserves to shield taxpayers from having to pay for more expensive bailouts. It would also lay the groundwork for a single banking supervisory mechanism for the 17-country eurozone.
The package of laws will stabilize the financial sector and is "very important for Europe as a whole," Noonan said. Noonan will chair the meeting, as Ireland holds the EU's rotating six-month presidency.
The European Parliament had insisted on adding the bonus cap to the package of financial laws, which make up about 1,000 pages of legal texts. Parliament had threatened to hold up approval of the entire package — a delay that the bloc, shaken by a three-year-old debt crisis, was keen to avoid.
Don Melvin in Brussels contributed reporting.
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