It's a BAD morning: Treasury appropriates RBS bonus pool while Sarkozy gloats
As of this morning, it transpires that the 2009 RBS bonus pool has been, "seized", by the British government, which now has the right to determine its, "quantum and shape."
Separately, Nicolas Sarkozy has been unable to resist a bout of wanton gloating following the appointment of Frenchman Michel Barnier as the European Commissioner for the single market (and EU financial services regulation). The Times reports him as saying (and we'll repeat this in full) -
"Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?
"I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism."
None of this bodes at all well for either RBS, or the City.
As we mentioned yesterday, RBS is apparently bursting to hire. Who'll want to work there now that Alastair Darling has imposed full parental controls?
Meanwhile, Sarkozy's remarks suggest we could be in for more along the lines of the EU's Alternative Investment Fund Managers Directive, widely seen as against the interests of the City.
All of this comes on the back of last week's Treasury-commissioned Walker Report, which - if implemented - would leave the UK with five year deferrals and the toughest bonus regime in the world.
The good news
Fortunately, however, all is not lost, yet.
RBS has already proven inventive in sidestepping bonus restrictions, and may be innovative yet.
Despite Sarkozy's rhetoric, the new Commissioner may prove benign. One consultant who advises on the migration of British financial services firms to Geneva, says he isn't suggesting anyone moves out for the moment.
"I would never advise a manager to move out of the UK purely because of what's in a draft directive, or the appointment of this or that person," says David Butler, founder of hedge fund advisors Kinetic Partners. "The draft directive is being updated on an almost weekly basis, and it's better to wait and see what specifically comes out of the appointment of Michel Barnier."
Finally, Jon Terry, head of reward at PricewaterhouseCoopers, says that as Walker's five year deferral recommendations weren't taken up in yesterday's new code of corporate governance, their chances of implementation are now restricted to either the FSA's Code of Practice (being reviewed in spring 2010), or the government's Financial Services Bill. Neither have shown any sign of adopting them yet.
This is good, because if the worst comes to pass, London will suffer. And guess what? Paris won't be the beneficiary.
