UK banks increase bonuses after the government removes EU cap, implementing deferred bonus structures to minimize risk-taking.
UK banks are increasing bonuses after the government removed the EU bonus cap, which previously limited bonuses to 2x fixed pay. While the Trades Union Congress (TUC) raises concerns about a return to the "bonus culture" of the past, the new rules require at least 40% of bonuses for material risk-takers to be deferred for 3-5 years, rising to 7 years for senior managers. Bonuses must be paid half in deferred cash and half in stock, with clawback rules in place. These measures aim to reduce excessive risk-taking in banking.
August 19, 2024
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