BRUSSELS, November 20 (Sputnik) – The European Court has formally rejected a UK Government bid to overturn EU regulations restricting the extent of banker bonuses following the financial crash of 2008, Advocate General Niilo Jaaskinen said Thursday.
“Advocate General Jaaskinen finds no legitimate grounds for the UK’s claim that the contested provisions infringe the principles of proportionality and subsidiarity, affirming that the objective of creating a uniform regulatory framework of risk management could not have been better achieved by national governments as opposed to the EU,” Jasskinen said in a ruling.
“Following the global financial crisis in 2008, the EU adopted a broad range of measures designed to enhance the regulation and stability of its financial institutions. During the discussions surrounding the adoption of these measures it was considered that the design of the remuneration schemes within these institutions was one of the major contributors to the crisis," Jaaskinen said.
“Often involving sizeable bonus pay-outs in comparison to salaries, this encouraged employees to engage in excessive risk taking in order to share in the banks’ short term profits, but not in the cost of their failures which, in the most serious cases, were borne by the taxpayer,” Jaaskinen added.
In 2013 the EU introduced new legislation limiting bonus payments to bankers and setting a fixed ratio between bankers pay and bonus payments. The UK Government, under pressure from the City of London, argued these regulations would inhibit the “harmonious development” of the financial sector, but this was rejected by the European Court.