What are the rules on bankers’ bonuses as chancellor wants to scrap cap?

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New Chancellor Quasi Quarteng is reportedly considering whether to eliminate a cap on bankers’ bonuses.

Mr Quarteng is said to believe that getting rid of the restrictions will spur the economy and make the City of London more attractive to global talent, leading to a further increase in tax revenue.

The EU-era limit was introduced in 2014 in response to the financial crash nearly five years ago, with member states complaining of exorbitant wages at a time when several governments introduced austerity measures.

The rules mean that bankers’ bonuses should be capped at 100 percent of their salary or 200 percent if shareholders agree.

According to the jobs website Prospects, the average starting salary for a corporate investment banker is between £30,000 and £40,000.

This rises to between £50,000 and £70,000 after three years, although those with significant experience can earn a basic salary of up to £165,000.

Under current rules, a banker on £165,000 could theoretically be awarded a bonus of £330,000.

Some analysts argued that bankers’ bonuses encouraged the kind of risk-taking behavior that resulted in the 2008 financial meltdown.

But critics of Seema have claimed that companies are able to easily overcome this by paying huge salaries.

Earlier on Wednesday, Bank of England policy manager Andrew Sentence said that getting rid of the cap now will increase inflation.

For the fiscal year ending 2017, the previous year for which Office for National Statistics data was available, the combined value of all bonuses paid to workers in all sectors in Great Britain was £46.4bn.

The biggest contributors to that total were the financial and insurance industries, which paid £15bn to their workers, or an average of £14,770 per capita – almost half the average starting salary for a nurse.

This was less than £19bn for the 2007–8 financial year.

The chancellor has been warned that getting rid of the cap would be unfair to the millions facing poverty and could repeat the blunders that led to the 2008 financial crash.

The Trades Union Congress (TUC) has criticized the move, saying it comes as a real-term pay cut on public sector workers and while “millions of people are struggling to keep their heads above water”. “.

Mick McAteer, a former Financial Conduct Authority board member, said it was a “bad idea” that would encourage aggressive risk-taking as seen before the disastrous 2008 crash.

Credit: www.independent.co.uk /

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