IT hardly matters what any of us within the industry thought, once the particular bonus cap ball was rolling there would be precious little chance of halting the imposition of a set of EU wide rules based constraints on bank bonuses. Thus the die has been cast in Brussels today and banks across the 27 EU member states are for the moment left to suck it and see as no doubt competitor banks in the Far East and North America seize the opportunity of poaching some of Europe’s best banking staff. Words something like ‘you made your bed and so you now lie on it’ spring to mind meaning that I have a deep suspicion that EU policy makers will soon enough know just how much damage they have done to an industry that above all others they really do need to now flourish.
What now? Banking is an industry that will never stand still. Initially banks will be forced to choose how they adapt to these new rules. A year from now things may though look very different. The bottom line of this is that banks should never allow excessive government to destroy what has taken decades to build up. If as I suspect they soon will that they begin to see themselves being disadvantaged by Continental banks they will have no choice but to open the fight for a level playing field. That means that in the fullness of time unless America, large parts of Asia including China and India join in with similar bonus rules we should expect to hear a lot of noise coming from European banks.
Even if we are to accept any part of the argument of necessity for such unwelcome EU action it is the duty of European banks to ensure that such a heavy handed and unnecessary rules based system should not disadvantage in terms of their specific ability to compete and to employ the best staff. In other words, no other nation must be allowed to gain from this EU folly.
Having played to a wide political and public audience the card that the EU has chosen to play today will I am sure come back to haunt them big time. If I am right then banks that sound off over unfairness in this latest and excessive rules based system will certainly not be perceived as throwing straws into the wind. Hopefully then the events in Brussels today will only be the beginning of the story rather than the end.
