Post by jackie on May 16, 2010 15:53:10 GMT 1
Don't you just love 'em? 
CITY investment banks are working on plans to guarantee billions of pounds in bonuses over the next few weeks to beat an expected crackdown by the new government.
A clampdown on City pay is expected to form part of the emergency budget due to be delivered by June 24, following warnings from Vince Cable, the business minister.
The City is lining up to defend itself from any further attack on pay, which bankers argue will kill London’s ability to compete as a global financial centre.
Senior bankers at a number of the City’s biggest institutions have started to work on plans to get round any new taxes.
If they offer legally-binding guarantees on bonuses before the new measures are announced the payments are likely to escape censure, the bankers believe.
Guaranteed bonuses were excluded from Alistair Darling’s banker bonus tax last year, due to the legal difficulties of retrospective taxation. The previous bonus tax only affected payments made before April 5, 2010, which related to 2009. Bonuses for 2010 are unaffected by the old tax, but could be hit by a new levy.
An attack on “unacceptable bonuses in the financial services sector” was part of the agreement unveiled by the new coalition government.
Cable warned this weekend that there is “no way of going back to the status quo” for the banking sector, renewing threats to break up retail banking from investment banking.
George Osborne, the new chancellor, has told senior bankers in private that he does not favour such a split, though he is still likely to push for restrictions on bank trading.
The coalition has said it will establish an independent commission to investigate banks, which will be given “an initial timeframe” of a year to report. This will delay a sale of the taxpayer’s multi-billion pound holdings in Royal Bank of Scotland and Lloyds by at least a year.
One senior banker said: “If the commission wants to focus on breaking up banks, then you won’t be able to sell many RBS shares. If it focuses on competition too, as the Tories promised, then you won’t be able to sell Lloyds shares either.”
UK Financial Investments, the state body holding the stakes, may also be asked to investigate whether Northern Rock should be turned into a mutual. The coalition agreed to “promote mutuals and create a more competitive banking industry”. UKFI, however, is obliged to find the best value for taxpayers, which is likely to come from a sale.
CITY investment banks are working on plans to guarantee billions of pounds in bonuses over the next few weeks to beat an expected crackdown by the new government.
A clampdown on City pay is expected to form part of the emergency budget due to be delivered by June 24, following warnings from Vince Cable, the business minister.
The City is lining up to defend itself from any further attack on pay, which bankers argue will kill London’s ability to compete as a global financial centre.
Senior bankers at a number of the City’s biggest institutions have started to work on plans to get round any new taxes.
If they offer legally-binding guarantees on bonuses before the new measures are announced the payments are likely to escape censure, the bankers believe.
Guaranteed bonuses were excluded from Alistair Darling’s banker bonus tax last year, due to the legal difficulties of retrospective taxation. The previous bonus tax only affected payments made before April 5, 2010, which related to 2009. Bonuses for 2010 are unaffected by the old tax, but could be hit by a new levy.
An attack on “unacceptable bonuses in the financial services sector” was part of the agreement unveiled by the new coalition government.
Cable warned this weekend that there is “no way of going back to the status quo” for the banking sector, renewing threats to break up retail banking from investment banking.
George Osborne, the new chancellor, has told senior bankers in private that he does not favour such a split, though he is still likely to push for restrictions on bank trading.
The coalition has said it will establish an independent commission to investigate banks, which will be given “an initial timeframe” of a year to report. This will delay a sale of the taxpayer’s multi-billion pound holdings in Royal Bank of Scotland and Lloyds by at least a year.
One senior banker said: “If the commission wants to focus on breaking up banks, then you won’t be able to sell many RBS shares. If it focuses on competition too, as the Tories promised, then you won’t be able to sell Lloyds shares either.”
UK Financial Investments, the state body holding the stakes, may also be asked to investigate whether Northern Rock should be turned into a mutual. The coalition agreed to “promote mutuals and create a more competitive banking industry”. UKFI, however, is obliged to find the best value for taxpayers, which is likely to come from a sale.