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EU set to clamp down on banking bonuses

EU officials are said to be in discussions regarding new regulations covering bonus payments in the European financial industry. In what may well turn out to be the hardest hitting changes to the financial sector in recent times it seems that upfront bonuses could be limited to 30% in cash, bonuses could be limited to a multiple of salary and at least 40% of future bonuses may well need to be deferred for several years. So what does this mean for the European financial sector?

When we say the European financial sector in effect we mean "London" which is by far and away the largest financial centre in Europe. If the ability to remunerate the best names in the financial sector as companies so wish is taken away from London then effectively this diminishes the attractions for highflyers in the industry. Unless the likes of the US and the Far East also take a similar stance to the European Union we could see many of the best names in the UK and European financial industry looking elsewhere.

While there is obvious concern regarding the level of banking bonuses, and indeed the fact that bonuses are being paid when each and every other sector in the European economy is struggling, is this the right move?

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