EU asks Britain to explain new 'allowances' in bankers' pay
By Huw Jones and John O'Donnell
LONDON/BRUSSELS (Reuters) - The European Commission has asked the Bank of England to explain how new allowances in British bankers' pay comply with an EU bonus cap, an official at the bloc's executive said, a new flashpoint of friction over the reach of financial control.
Under EU rules, from 2015 bonuses cannot be more than fixed salary, or double this amount with shareholder approval, and most of the bankers affected are based in London.
Banks including Barclays, HSBC and Goldman Sachs are expected to raise the non-bonus part of remuneration with, for example, monthly or quarterly "allowances".
The European Commission official said the executive has asked the European Banking Authority (EBA), an EU watchdog, to seek an explanation on such extra payments from the BoE's Prudential Regulation Authority (PRA).
"A report is expected next week," the official said.
The EU executive has powers to fine countries that fail to apply its rules properly.
The PRA said bank remuneration policy is frequently discussed but it would not comment on any ongoing discussions.
Britain is challenging the bonus cap in the EU's top court, arguing it goes beyond EU powers and will push up fixed pay, making banks riskier as they will not be able to trim costs quickly in rocky markets. Continued...