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How will new remuneration limits affect the UK banking sector?

As we reported in one of our earlier posts, the UK government has agreed a raft of changes within the UK banking system which will see remuneration and bonus packages limited in the UK. However, many people do not seem to realise that the UK banking industry is dominated by many overseas companies who will not necessarily agree to sign up to the remuneration limits and new regulations. There is a concern that UK-based banks could see their most talented staff transferring to overseas operations which may well be able to pay them higher remuneration and higher bonuses.

As a consequence, the likes of Lloyds bank, Royal Bank of Scotland, Standard Chartered and the other operations which have signed up to the government changes could see many of their top earners looking elsewhere. There is even potential for US-based banks to head hunt UK banking masterminds to move to the States where the remuneration and bonus limitations would be far less onerous than those in the UK.

While on paper the new limits on remuneration and bonuses, with some payments deferred, look like a success for the UK government, they may well be to the detriment of the UK banking sector as a whole.

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