European Business Law Review

Volume 27 (2016)

Volume 27 (2016) / Issue 7

Longjie Lu, 'The End of Bankers’ Bonus Cap: How Will the UK Regulate Bankers’' (2016) 27 European Business Law Review, Issue 7, pp. 1091–1125

Abstract

In response to the 2008–2009 financial crisis, the EU has launched significant regulatory reforms on the Capital Requirement Directives and introduced many tougher rules on bankers’ remuneration. Particularly, bankers’ remuneration across the EU should be subject to a ratio between the fixed and variable components, which is usually known as bankers’ bonus cap. On the issue of applying bankers’ bonus cap to local financial institutions, the UK government has always held an opposite stance against the EU.

This article analyses the deep reasons behind the conflicts between the UK and the EU on the issue of capping bankers’ bonuses, namely, the UK’s political economic interests in the global financial market and the opposite philosophies on bankers’ remuneration regulations. Furthermore, the article tries to predict the influences of Brexit on the regulations of bankers’ remuneration in the UK. Specifically, the artile argues that bankers’ bonus cap will eventually be removed and the UK will get back to its free market-based approach whereby the market plays the primary role in deciding bankers’ remuneration and enhanced regulations compensate the market deficiencies.

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ISSN: 0959-6941
ID: EULR2016048