Treasury select committee chair Andrew Tyrie has hit out at the “appalling” behaviour of one of the European regulators in a row over the “gaming” of the bankers’ bonus cap.
Speaking at a TSC hearing today, Prudential Regulation Authority chief executive Andrew Bailey said the European Banking Authority had wrongly suggested the UK supported a crackdown on abuse of the bank bonus cap.
The EBA is an independent EU authority which ensures prudential regulation and supervision across the European banking sector.
In the last year banks have used role-based allowances to boost earnings, which can be used within fixed pay and avoid the cap. This week the EBA said allowances must be included within variable pay, claiming unanimous approval.
The PRA, FCA and Treasury are united in opposition to the bonus cap of 100 per cent of salary, or 200 per cent with shareholder approval, but were outvoted 26 to one last year in Brussels.
Bailey, who is the UK representative on the EBA, has openly criticised the EU bank bonus cap and insists it will simply push up fixed salaries, which reduces regulators’ control over executive pay.
The controversy surrounding the introduction of the cap has been a sensitive issue for the UK.
Tyrie said: “It’s appalling behaviour on their part, isn’t it? It’s not an accident is it?”
Bailey said he has been told the EBA will correct its error at its next meeting.
He said: “That was incorrectly transmitted by the EBA. I was made aware very quickly because our press office had been told by the EBA it was a unanimous vote. This was obviously a problem that after everything we’ve said it would be unlikely we would vote for that.
“I spoke to the EBA and said ‘frankly, I am very surprised you have informed journalists of the vote as I thought the rules were that we didn’t do this and more over you’ve got it wrong.’”