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EU bank bonus rules attract criticism

As we covered earlier this week, the European Union is looking at ways of reducing bonus payments for the European banking sector and deferring as much of the larger payments as possible. It is believed that the EU would prefer to see up to 60% of banking bonuses deferred over a potential five-year period although it has been revealed that taxation on bonuses would be expected upon the award of the shares and cash, even if they are freed-up many years later.

There is no way that the European banking community will accept a potential deferment of bonus payments for up to 5 years while having to fork out for unfunded tax payments which could fluctuate in the future depending upon share prices. It seems as though the more the European Union becomes involved in the European financial sector the muddy the water gets and the more friction between the two parties.

There is no doubt that the European Union is targeting London with many of these new proposals and new initiatives with a determination to rein in the power of London and use this for the benefit of the European Union as a whole. However, reducing the competitiveness of London on the worldwide stage is not the answer as this would potentially force investors to look towards the Far East or perhaps the American markets. There appears to be a lack of long-term thinking!

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