Major US banks are advocating for the European Union to ease its restrictions on banker bonuses, aiming to incorporate this change into a broader reform package designed to enhance the continent’s competitive standing. This push is creating friction with their European counterparts. Firms such as Goldman Sachs, Citigroup, and JPMorgan Chase are reportedly urging European finance lobbyists to champion the revision of remuneration regulations as part of the EU’s forthcoming review of its banking rule book.
The United Kingdom has already eliminated these caps, which limited bonuses to double the fixed salary, to reduce unnecessary burdens on its financial sector. Now, the EU is expediting its planned review of banking regulations following demands from nations like France and Germany. The US banks are aiming to align European regulations more closely with those in the UK and the US, where bonus caps are either non-existent or less restrictive.
The Association for Financial Markets in Europe has reportedly agreed to include the bonus cap issue in its list of desired reforms. Meanwhile, the European Banking Federation has also been approached regarding the matter. The outcome of these lobbying efforts remains uncertain, but the US banks’ initiative highlights a significant point of contention in the ongoing reshaping of European financial regulations.
These US financial institutions provide a range of services including investment banking, asset management, and wealth management. They are looking for a more level playing field with their European competitors.
