Kwarteng seeks to scrap bankers’ bonus cap

Chancellor Kwasi Kwarteng
Chancellor Kwasi Kwarteng

Kwasi Kwarteng is considering lifting a cap on bankers’ bonuses in an attempt to make the City more competitive globally.

The Chancellor is understood to believe the initiative would attract top talent to Britain amid a scramble to improve London’s position against other financial centres such as New York, Frankfurt, Hong Kong and Paris.

Former prime minister Boris Johnson never proposed scrapping the cap, which limits bonuses to twice annual salary, to avoid a backlash.

According to the Financial Times, Mr Kwarteng, who has promised a “Big Bang 2.0” in the City driven by post-Brexit rules, told banking executives last week: “We need to be decisive and do things differently.”

No final decisions have been made yet.

The idea was previously floated in June, when Labour leader Sir Keir Starmer said it would lead to “pay rises for bankers, pay cuts for district nurses”.

The measure is part of EU legislation introduced in 2014 in light of the 2008 financial crash but always met Britain’s opposition.

Senior Tories say the Chancellor is “unashamedly” looking for solutions to boost growth, according to the FT.

Mr Kwarteng would contrast potential criticism by placing the measure in the context of a wider £150bn state package to support families and businesses through the energy crunch.

The new government’s mini-budget is due next week, although it is understood City reforms may be postponed to a later date.

Richard Gnodde, head of Goldman Sachs’ international operations, told the FT lifting the cap would make “London a more attractive place for sure”.

He said that currently, “if I move a senior person between New York and London I am driving up the fixed cost of our operations.

“If that rule doesn’t exist, I don’t have to think about that.”

Published by anthonyhayble

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