LONDON: Bankers voiced frustration at a European Union cap on their bonuses yesterday, telling regulators it will catch too many of them and could bump up risks.
But mindful of public anger with a sector rescued by taxpayers in the 2008/9 financial crisis, they avoided challenging the principle of what will be the world's toughest curb on top bankers' pay.
Bankers crammed into the over-subscribed hearing at the European Banking Authority (EBA) on the 18th floor of an office tower overlooking London's financial district where many of them work.
They were trying to persuade the EU's banking supervisor to tweak the details of a draft rule to limit bonuses to no more than fixed pay for those earning over 500,000 euros ($648,600).
The EBA wants to rein in financial incentives for bankers to avoid a repeat of the excessive risk-taking seen in the run-up to the crisis.
The Association for Financial Markets in Europe (AFME), representing the world's top banks, said the cap could crimp the free movement of labour, a basic EU tenet, and was unfair for some staff such as highly-paid analysts who don't take risks for the bank, or lower-paid junior bankers.
"We seen some tendency to apply an overly prescriptive and simplistic approach," AFME director for advocacy, Stefano Mazzocchi said.
A simple way round the rule would be to bump up fixed pay. But increasing basic pay for many junior staff would increase a bank's costs and, as a result, the risks to the broader financial system, the AFME said.