Government resists widening scope of banker bonus curbs

LONDON (Reuters) - Rules to prevent bonuses from encouraging excessive risk taking at banks should not be extended to junior staff and put Britain out on a regulatory limb, a British government minister said on Monday. European Union rules on banker pay that are applied in Britain are already the toughest in the world and curb how much of a bonus can be paid upfront and how much must be deferred. They were introduced after reckless behaviour by bankers led to the 2007-09 financial crisis, with ensuring austerity across Europe also sparking public anger at big banker bonuses. The EU rules, which include a cap on bonuses in relation to fixed pay, apply to so-called material risk takers or more senior staff in key roles, most of whom are based in London. A banking report from a group of British lawmakers had called for bonus curbs to be applied to more junior staff as well, but Andrea Leadsom, a financial services minister, has rejected this. Extending the scope would go significantly beyond international standards and could result in inappropriately strict regulation of the pay of relatively junior staff, Leadsom said in a letter published on Monday. "Our view is that the potential changes consulted on by the regulators... are prescriptive and appropriate only for individuals whose actions may have a material impact on the risk profile of a firm," Leadsom said. Andrew Tyrie, the senior British politician who chaired the parliamentary banking report, acknowledged that widening the scope would go beyond international rules in a move bankers have warned could harm London's competitiveness as a global financial centre. "But it is essential for the protection of shareholders and customers that remuneration standards of some sort apply. The government should reconsider," Tyrie said in a statement. The EU's banking watchdog, the European Banking Authority, is expected to consult soon on strengthening the bloc's banker remuneration rules. (Reporting by Huw Jones; Editing by Crispian Balmer)