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EU Fights Back on Banker Bonus Cap as U.K.’s Legal Challenge Begins

Roberta Holland | September 10, 2014

The chess match over caps on banker bonuses continued this week, as United Kingdom and European Union lawmakers sought to outmaneuver one another in the remuneration battle.

At issue is the impending rule limiting bankers’ bonuses to 100 percent of fixed pay or twice their fixed pay with shareholder approval. That rule, scheduled to take effect in January, was part of the larger Capital Requirements Directive package approved by EU lawmakers in 2013 to tighten financial regulations and guard against excessive risk taking.  Both U.K. lawmakers and members of the financial sector there were vocal in opposition to the caps, claiming it would hurt the sector’s competitiveness and drain talent.

This week lawyers for both sides began their arguments at the European Court of Justice in Luxembourg. The U.K. is seeking annulment of the regulation, arguing the...

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