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Christopher Wakem: London Banks Dodge European Rules
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Christopher Wakem: London Banks Dodge European Rules

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Banker bonuses are starting a battle in Great Britain’s capital. Regulators have been limiting bonuses since the 2008 financial crisis for fear of bankers and investors taking big risks if they have ...

Banker bonuses are starting a battle in Great Britain’s capital. Regulators have been limiting bonuses since the 2008 financial crisis for fear of bankers and investors taking big risks if they have a big payout in hand. The European Union has taken this course of action a bit further by limiting banker bonuses to two times their salary or less.

Christopher Wakem is a London-based legal consultant/contractor who has worked in the independent bar, private practice, and in-house sectors. He has obtained law degrees from the University of Sheffield and University College. Mr. Wakem has provide advice in a wide array of matters, both contentious and non-contentious, through his company Lightbringer Solutions Ltd. Chris has helped companies large and small establish risk management policies, develop start-up procedures, negotiate framework agreements, secure insurance coverage, and deal with Anti-Money-Laundering and Anti-Bribery and corruption matters.

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    Christopher Wakem: London Banks Dodge European Rules Christopher Wakem: London Banks Dodge European Rules Document Transcript

    • London  Banks  Dodge  European  Rules   By  Christopher  Wakem   February  20,  2014     Banker  bonuses  are  starting  a   battle  in  Great  Britain’s  capital.   Regulators  have  been  limiting   bonuses  since  the  2008  financial   crisis  for  fear  of  bankers  and   investors  taking  big  risks  if  they   have  a  big  payout  in  hand.  The   European  Union  has  taken  this   course  of  action  a  bit  further  by   limiting  banker  bonuses  to  two   times  their  salary  or  less.     However,  outside  the  EU,  large   banks  in  London  want  to  work   around  these  restrictions.  These   big  players  include  Goldman   Sachs,  Bank  of  America,  Merrill  Lynch,  and  Barclays.  They  are  doing  so  by  manipulating  pay   packages  that  will  satisfy  both  regulators  and  employees.  The  new  pay  packages  mean  that   employees  will  no  longer  get  big  bonuses,  but  they  will  have  role-­‐based  pay.  You  can  think   of  this  a  ‘reviewable  salary.’  In  reality,  the  big  banks  are  simply  disguising  bonuses,  which   does  not  please  European  lawmakers.     The  big  banks  in  London  may  retort  that  the  European  bonus-­‐cap  law  puts  them  at  a   disadvantage  in  the  global  market  place  because  traders  in  New  York,  Hong  Kong,  and   Singapore  do  not  have  such  laws.  Right  now  the  London  banks  have  the  support  of  the   British  Parliament  because  they  are  in  the  process  of  suing  to  block  the  law.   Although  the  banking  industry  usually  pays  more  based  on  performance,  they  have  been   advised  by  their  British  regulator  that  payments  may  pass  if  they  are  non-­‐contractual  and   not  based  on  performance.  Barclay’s  chief  executive,  Antony  P.  Jenkins  has  stated  that  role-­‐ based  pay  “was  not  performance  related,  but  an  adjustment  to  fixed  pay.”     The  European  Banking  Authority  is  now  working  on  guidelines  to  help  clarify  what   constitutes  “fixed  and  variable”  compensation.  Although  London  banks  are  slightly   protected  by  the  British  parliament  for  now,  the  European  Commission  has  the  right  to   investigate  noncompliance  and  bring  violations  to  trial  at  the  European  Court  of  Justice.     Christopher  Wakem  is  a  London-­‐based  legal  consultant/contractor  who  has  worked  in  the   independent  bar,  private  practice,  and  in-­‐house  sectors.  He  has  obtained  law  degrees  from  the   University  of  Sheffield  and  University  College.  Mr.  Wakem  has  provide  advice  in  a  wide  array  of   matters,  both  contentious  and  non-­‐contentious,  through  his  company  Lightbringer  Solutions   Ltd.  Chris  has  helped  companies  large  and  small  establish  risk  management  policies,  develop   start-­‐up  procedures,  negotiate  framework  agreements,  secure  insurance  coverage,  and  deal   with  Anti-­‐Money-­‐Laundering  and  Anti-­‐Bribery  and  corruption  matters.