Report: City of London banks could sue over EU bonus cap

5 March 2013

Major banks based in the City of London are looking into the possibility of taking legal action against the European Union (EU) following the decision to impose caps on bonuses.

Last week, officials came to an agreement that will see the additional remuneration that professionals in the financial industry can receive being restricted to a maximum of the equivalent of their annual salary.

Despite the fact the plan received support from the vast majority of countries in the region, the UK government spoke out in opposition on the basis this would undermine the competitiveness of the City of London in comparison to other global financial centres.

Indeed, chancellor George Osborne is going to Brussels today (5 March) in a last-ditch attempt to change the proposals.

However, due to his slim chances of success, financiers are considering "other radical steps", the Financial Times reports.

For instance, legal advice for one bank seen by the news source claims that the bonus cap "contravenes European law" because of the EU treaty provision that prevents the regulation of pay in member states.

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development