End of the year marks the start of the bonus season on Wall Street and in the City of London. Stories on who gets what will be followed closely, not just by anti-bank populists but also by traders themselves. On the website of the Financial Times, articles on bonuses tend to reach the rank of the mostly read pieces. Financial Times readers are usually more interested in stories on bonuses than on capital requirements for banks.
A recent front page article on the Wall Street Journal (“Big Rally Pumps Up Wall Street Bonuses“) debunks the key argument of the London financial sector to keep bonuses high. What is that argument first of all?
When regulators try to limit bonuses, finance lobbyists retort that they will not be able to retain top talent who boost their firms’ performance. The European Union will soon impose a cap on bonuses, which shareholders can set at a maximum of double the base salary. The UK government is attacking such a cap in the court with legal arguments, but mostly because it fears an exodus of bankers from the City Continue reading