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March 5, 2013

London banks turn to law on bonus caps

“The City of London’s big banks are considering suing the EU over rules to cap bonuses after receiving legal advice that the pay regulation could be struck down in court.

The drastic options being weighed up by bankers underline industry anxiety over a fixed ratio pegging bonuses to salary, which will be debated by EU finance ministers in Brussels on Tuesday.

George Osborne, the UK chancellor, is planning to fight a rearguard action to revise the terms of the cap but diplomats are doubtful Britain will secure major changes at such a late stage.

The stark odds against Mr Osborne are prompting banks to consider other radical steps, including suing. Legal advice for one bank, seen by the Financial Times, argues that the proposed ban on bonuses that exceed salary “contravenes European law” because of an EU treaty provision that prohibits regulating pay in member states.”


Read full Financial Times article here

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