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| Version 0 | Version 1 |
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| UK Treasury in legal challenge to EU bonus cap | UK Treasury in legal challenge to EU bonus cap |
| (35 minutes later) | |
| The UK Treasury has launched a legal challenge against European Union plans to cap the level of banking bonuses. | The UK Treasury has launched a legal challenge against European Union plans to cap the level of banking bonuses. |
| The cap is designed to come into effect on bonuses awarded from 2014. | The cap is designed to come into effect on bonuses awarded from 2014. |
| It would limit the bonus to no more than a banker's salary, although if shareholders agree it could be higher. | It would limit the bonus to no more than a banker's salary, although if shareholders agree it could be higher. |
| The bonus culture within financial services has been blamed for encouraging excessive risk-taking among bankers. | The bonus culture within financial services has been blamed for encouraging excessive risk-taking among bankers. |
| The cap is designed to limit a bonus to no more than a banker's fixed salary, or twice that level with shareholder approval. | |
| The UK has the biggest financial sector in the European Union and would therefore be the most affected by the cap. | |
| Its objections were outvoted by fellow EU members. | |
| The government worries that a cap will simply push up the level of fixed pay to compensate for lower bonuses. | |
| It has a list of six reasons why it believes the cap will not work: | |
| The Treasury said the EU's bonus cap was likely to "act counter to the stated objectives of the legislation, which are to ensure banks are safer, more stable, and prudentially sound." | |
| It added that it could end up saddling banks with higher salary bills by making it harder to reduce pay rates when profits were falling: "The UK has repeatedly raised concerns that the provisions are likely to lead to increases in fixed pay, which is harder to cut in times of stress, and more difficult to claw back and there is no evidence this will improve financial stability." | |
| The Treasury aims to challenge the rules in the European Court. |