Prudential Regulation Authority chief executive Andrew Bailey has lashed out at the EU cap on bankers’ bonuses, branding it the “wrong policy”.
Speaking at Mansion House in London last night, Bailey said the debate around a bonus cap is “misguided”.
Last year the EU introduced a cap on bank bonuses of 100 per cent or 200 per cent with significant shareholder approval.
Critics argue banks are finding ways around the cap or simply raising non-variable pay to compensate.
The Treasury, FCA and the Bank of England are united in condemning the policy, which left the UK isolated in Brussels.
Bailey said: “Let me be blunt, the bonus cap is the wrong policy, the debate around it is misguided, and the best thing I can say about allowances is that they are a response to a bad policy.
“They are not a good solution. I will not win friends in some places for saying this but it dismays me to see a debate which is at times so divorced from the heart of the matter, which is setting appropriate incentives by putting a meaningful amount of pay at risk.
“Sadly, taking this stance sometimes attracts the criticism of being pro-bonuses. This is not true, and I can say from experience that advocating putting bankers’ pay at risk does not naturally improve my popularity in some quarters.”