Chancellor wins limited support for tweaks to draft law, arguing that UK already has the toughest regime in the world on bankers' pay

This article is more than 7 years old

This article is more than 7 years old

George Osborne told EU finance ministers on Tuesday that he could not support proposals to limit bankers' bonuses to a year's salary.

Osborne won limited support for "technical" tweaks to the draft legislation, although it appeared unlikely that Britain would make big gains in seeking to reverse the key points.

The chancellor argued that Britain already had the toughest regime in the world on bankers' remuneration and that the proposals to cap bonuses could "have a perverse effect".

The caps could "undermine" the aim of reining in unmerited bonuses, would result in bankers' salaries rising steeply and would make it harder to claw back bonuses not commensurate with performance, the chancellor said.

Wolfgang Schäuble, the powerful German finance minister, threw Britain a slender lifeline, saying he wanted to avoid the contentious issue being put to a vote. In the interests of securing a consensus, he called for the further elaboration of "technical points" on how the bonus curbs should be implemented.

There was also disagreement on when the new regime should become effective. The proposal calls for the caps to be introduced at the beginning of next year, but some ministers called for a delay.

"I can't support the proposal on the table," said Osborne, who is hoping to shift the caps issue towards greater emphasis on discounted and deferred five-year bonuses based on longer-term performance and less cash-oriented than share options.

Michel Barnier, the EU commissioner for the single market, argued robustly for the caps.

"Remuneration is a sensitive issue, sensitive for our citizens, for our taxpayers," he said. "We want to discourage risk-taking."

Some bankers, he added, indulged in risky business because they were paid to.

"Enough is enough. We've got to put a stop to that."

Chairing the meeting, Michael Noonan, the Irish finance minister, closed the discussion saying there was a "broad majority" behind the proposals. But that there would be further discussion "on some technical points" on how to implement the bonus caps and on the timing issue.

Any changes would need to be agreed with the European parliament which forced the issue of curbs on bankers' bonuses by agreeing the new curbs last week.