January 2014 is drawing closer. A lot of banks still need to work out the best response to the coming EU bonus cap, which will ban them from paying bonuses in excess of 250% of salary. Sky News reports that Barclays has opted to exploit a highly conspicuous loophole in the EU's fiendish plan.
''Barclays' 'third way' on bank pay would involve splitting remuneration into three separate elements, rather than the current structure comprising basic pay and annual bonuses.
In addition to the existing components, a non-pensionable sum would be determined each year based on an individual's responsibilities. Paid each month in cash, this would supplement the employee's base salary but not be allowed to count towards the basic pay from which annual bonuses would be calculated."
Pay consultants predicted this was how banks would sidestep the cap back in September. EU MEP's may now be cursing their naivety and oversight. With fewer than 10 weeks until the cap is due to be introduced, there may not be enough time to tighten the rules. Could this also be why banks are leaving it until the last minute to announce their responses?
Not everyone is convinced that Barclays' ruse will work. William Wright, banking columnist for Financial News, appears skeptical....