Britain's hopes for EU banking rules changes recede

Britain’s hope of securing any significant changes to banking rules agreed last week receded yesterday after EU officials said the main thrust of the proposal would remain unchanged.

British chancellor of the exchequer George Osborne told European finance ministers at a meeting in Brussels that Britain would not support the deal in its current form but is hoping for “progress” in the coming weeks as the Irish presidency negotiates technical details with the European Parliament.

The proposal, which includes a cap on bankers’ bonuses, can be passed by a qualified majority vote.

‘Best compromise possible’

Speaking after the meeting yesterday, Minister for Finance Michael Noonan said the proposal had been “broadly endorsed” by member states and negotiations would now be finalised with the European Parliament with the aim of securing agreement by the end of the month. He said Ireland had secured the “best compromise possible” on the deal.

Mr Osborne argued that the proposal to cap bankers’ bonuses would have a “perverse effect” on efforts to link rewards for bankers’ to performance. Britain, he argued, has “tougher rules on pay and bonuses than any other financial centre in the world.”

Few countries had paid a heavier price than the UK for the “irresponsibility of bankers”, he said.

Anger

“[That] anger has meant that people want to see action taken to make bankers more accountable for their actions. They want rewards in banking linked to performance. I wholeheartedly agree with that,” he added.

While the 26 other member states backed the proposal at a meeting of finance ministers in Brussels, German finance minister Wolfgang Schauble gave some hope to Britain when he said his preferred option would be overall consensual support for the deal.

“I would strongly support the use of the remaining limited room for technical details, so we won’t have to decide by qualified majority on an issue the issue,” he said.

“I would strongly ask for the commission, presidency and parliament to use the remaining move for manoeuvre.”

Focus is now shifting to the issue of how deferred pay is treated within the bonus rules.