EU nears cap on banker bonuses, as Osborne holds out

The UK is one of just three countries opposed to the cap.

EU banking reforms are set to impose a limit on bankers' pay, against the wishes of much of the City of London.

The proposal, backed by the democratically-elected European Parliament, would cap bonuses that exceed the recipients salary. France has recently come around to the idea, and, the Financial Times reports, there is now a "clear majority" which is willing to agree to the cap just to get the debate out of the way. The rest of the reforms, which are focused on bank capital ratios, are considered urgent, and there is little desire to hold them up over the pay caps.

The UK, leading those who oppose the pay caps, has suggested that even it is preparing to case on the basic idea, circulating a policy document suggesting reforms which "build on the principle of a cap", the paper reports:

It strengthens current rules enforced in the UK with an absolute ban on upfront cash bonuses that exceed salary and a requirement for bank shareholders to set a cap on variable to fixed pay.

But a ban on upfront cash bonuses is very different from the ban on the entire bonus exceeding salary. That proposed ban can, with a vote from a supermajority of shareholders, be weakened to a 2:1 ratio of bonus to salary, but even that is still a far more restrictive requirement than the one the UK desires.

The British government has reasons for its scepticism. The argument for including bonuses in a bill focused on bank stability is that, when a bonus can exceed the value of one's salary, the incentive to play it safe rather than go for massive short-term profits is reduced. But the UK also makes a compelling argument for focusing just on cash bonuses. Other types of bonus, like front-dated stock options or bonds which vest only if the employer still exists, can be tweaked so as to encourage not only profit but healthy, stable, profit.

In contrast, if the EU's current plan passes, the incentive will be to offer the entire value of the cap in up-front cash. The magnitude of the bonus may thus be shrunk, but its incentive effects could end up being perversely increased.

Nonetheless, politically the economic effects of the bonus cap are likely to be less important than the simple fact of its existence. The banking sector has been seen as overpaid by most of the British public for a very long time now, and if Osborne digs his heels in over what many will see as the right for banks to pay unlimited bonuses, he could find himself even more unpopular than he already is.

That is especially true if the importance of what is being delayed hits home. The capital ratios — which are the main focus of the talks — are widely seen as one of the first post-crisis regulations which could actually have a real effect on the likelihood and severity of future financial crises. By requiring banks to have a certain amount of liquid capital on hand, the move will, it is hoped, prevent the damaging bank runs which ultimately contributed to the recession in 2008. If the Chancellor is seen as holding the economy hostage over the right for banks to pay unlimited bonuses, his image as a canny political operative may be damaged somewhat.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Casting the Brexit movie that is definitely real and will totally happen

Details are yet unclear as to whether The Bad Boys of Brexit will be gracing our screens, or just Farage's vivid imagination.

Hollywood is planning to take on the farcical antics of Nigel Farage et al during the UK referendum, according to rumours (some suspect planted by a starstruck Brexiteer). 

Details are yet unclear as to whether The Bad Boys of Brexit will be gracing our big or small screens, a DVD, or just Farage's vivid imagination, but either way here are our picks for casting the Hollywood adaptation.

Nigel Farage: Jim Carrey

The 2018 return of Alan Partridge as "the voice of hard Brexit" makes Steve Coogan the obvious choice. Yet Carrey's portrayal of the laughable yet pure evil Count Olaf in A Series of Unfortunate Events makes him a serious contender for this role. 

Boris Johnson: Gerard Depardieu

Stick a blonde wig on him and the French acting royalty is almost the spitting image of our own European aristocrat. He has also evidently already mastered the look of pure shock necessary for the final scene of the movie - in which the Leave campaign is victorious.

Arron Banks: Ricky Gervais

Ricky Gervais not only resembles Ukip donor Arron Banks, but has a signature shifty face perfect for the scene where the other Brexiteers ask him what is the actual plan. 

Gerry Gunster: Anthony Lapaglia

The Bad Boys of Brexit will reportedly be told from the perspective of the US strategist turned Brexit referendum expert Gerry Gunster. Thanks to recurring roles in both the comedy stalwart Frasier, and the US crime drama Without a Trace, Anthony Lapaglia is versatile enough to do funny as well as serious, a perfect mix for a story that lurches from tragedy to farce. Also, they have the same cunning eyes.

Douglas Carswell: Mark Gatiss

The resemblance is uncanny.

David Cameron: Andrew Scott

Andrew Scott is widely known for his portrayal of Moriarty in Sherlock, where he indulges in elaborate, but nationally destructive strategy games. The actor also excels in a look of misplaced confidence that David Cameron wore all the way up to the referendum. Not to mention, his forehead is just as shiny. He'll have to drink a lot of Bollinger to gain that Cameron-esque puppy fat though. 

Kate Hoey: Judi Dench

Although this casting would ruin the image of the much beloved national treasure that is Judi Dench, if anyone can pull off being the face of Labour Leave, the incredible actress can.