Sharon Bowles MEP writes about bankers’ bonuses in the Independent. She tackles the arguments against EU proposals to limit bonuses to a years’s salary. Will banks relocate overseas? Sharon says not:
Firstly, the threat of bankers relocating to avoid the cap has been grossly exaggerated. The cap will only apply to a small number of so-called high-risk traders, around 5000 out of the estimated 750,000 people employed in London’s financial sector. Moreover, the bonus cap will also cover all key staff who work for European banks across the world, no matter whether they operate in London or Singapore. And with Switzerland having just voted for even broader limits on executive pay for all companies, European bankers are hardly likely to relocate to Zurich.
There are also many good reasons for banks to remain in London, including the city’s historical clout and financial expertise, access to the EU and capital markets, a strong legal framework, implicit taxpayer guarantees and the GMT time zone. We should also not discount the excellent lifestyle and cultural attractions offered by what remains a world class city. In any case, if the effect of bonus regulation is to force the introduction of new blood and new talent, instead of the cosy clique that fostered the Libor-rigging merry-go-round, then perhaps that is no bad thing.
She talks about other aspects of the banking reforms, including greater transparency for the banking sector.
Another key part of the reforms, largely overshadowed by the issue of bankers’ bonuses, are the strict new transparency requirements for the financial sector. These will force banks to disclose their profits and tax arrangements in each country in which they operate, both in Europe and throughout the world. This is something I have long campaigned for, and is a major first step in ensuring that all multinational companies pay their fair share of tax and do not stash away their profits in off-shore savings accounts.
You can read the whole article here.
* Caron Lindsay is Co-Editor of Liberal Democrat Voice and blogs at Caron's Musings