If putting the top UK marginal tax rate higher than the US wasn't enough to drive American and Japanese bankers to Switzerland then a draft EU (who asked them) regulation might do the trick.
Bankers' bonuses and golden parachutes would be capped in all European Union countries under a draft policy circulating in Brussels. The European Commission will ask the 27 EU countries to bring in tougher remuneration rules for financial institutions with an office inside their borders, covering all staff whose jobs affect the firm's risk position. The new rules would also apply to all subsidiaries of EU-based parents, wherever located.
Directors' termination payments would be limited to two years fixed remuneration and share options could not vest in less than 3 years.
EU Recommendations are not binding on member states, but hey, why take the risk? The golf may not be up to much but the skiing beats the hell out of the People's Socialist Republic of Londonistan.
2 comments:
You have asked an interesting question, that everyone is trying to avoid, and to which there may not be answer. Where are all the bankers and banks going to go? The answer may be unexpected, in that in the internet age, they no longer need to be in the same place, and indeed the separation of function has already begun. Work out the implications of that one, and you will understand why the present financial crisis is going to be much more difficult for governments to grapply with than any previous one.
A lot of operations are now outsourced to India, and is thus delinked from the choice of front office business location.
Businesses have congregated in London because there is a critical mass of knowledgeable traders. staff, lawyers etc, but there is no reason for banks to continue to build up their European or global operations there.
Frankfurt may be too boring for some, but Zurich or even Paris could be attractive to some.
Dubai is tax-free and handier for many growth markets (Russia, India, China).
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