EU Court adviser backs cap on bank bonuses
BRUSSELS (AP) — A key adviser to the European Union’s highest court is siding against Britain and wants the EU cap on bankers’ bonuses to be maintained.
Advocate General of the European Court of Justice Niilo Jaaskinen recommended Thursday that British attempts to derail the EU financial law “should be rejected.”
EU legislation limits bankers’ bonuses at one year’s base salary and double that if a large majority of shareholders agree. The advice of the advocate general is confirmed in a majority of cases when the court itself makes a ruling, which is expected within months.
Britain says the rules will lead to an increase in bankers’ fixed pay, drive away talent and weaken Europe’s financial industry, the heart of which is in London’s City.
The government of Prime Minister David Cameron wanted to keep such decisions as a national prerogative. The issue of whether the EU should make decisions against the wishes of London goes to the heart of the debate on whether Britain should stay within the 28-country bloc.
Jaaskinen said in his assessment that he “finds no legitimate grounds for the U.K.’s claim” that the EU should stay out of such issues.
The British government responded only that it was “considering the (court) opinion and its implications in detail.”
Backers of the cap say huge bonuses pushed bankers to seek short-term personal gain through massive long-term risks that threatened the overall health of theirs banks — and ultimately needed bailouts funded by taxpayers. They say such incentives to risk-taking helped destabilize the financial system and trigger the 2008-2009 financial crisis.
The British opposition, sensing the full ruling is expected to go its way, was more open. “The bonus culture is totally unjustifiable, and leads to a very risky form of capitalism. People have been taking too many risks,” said Labour MEP Neena Gill.
Instead of mounting legal challenges, Gill said that Cameron should “be working with fellow European leaders, not alienating them and losing influence.”
Raf Casert can be followed on Twitter at http://www.twitter.com/rcasert
(An earlier version of this story gave the wrong day for the statement and misspelled the writer’s first name.)