EU bank pay curbs questioned by Hoban

4 November 2010

Financial secretary to the Treasury Mark Hoban has said the EU's plans to limit bank bonuses could have unintended consequences.

Speaking at the Royal Institute of International Affairs in London on Wednesday (November 3rd), the minister warned that stricter curbs on bankers' pay in Europe risk creating an "uneven playing field".

Although he stressed the need for reform, Mr Hoban said the EU has been "prepared to move further and faster than the US or the Far East" in terms of drafting tighter rules for remuneration in the financial sector.

He called for "more effective mechanisms for the co-ordination and implementation of global agreements" on issues such as pay.

The bonus curbs, due to take effect in January 2011, form part of the revamped capital requirements directive for European banks.

Jerome Brunel, an executive at French bank Credit Agricole, questioned the new rules at a recent hearing organised by the Committee of European Banking Supervisors.

In comments reported by Reuters, he said European banks will risk losing top staff to US and Asian competitors as a result of the bonus clampdown.

By Gary Cooper

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