EU court adviser recommends upholding limit on bank bonuses

A legal adviser to the European Court of Justice recommended on Thursday that the court uphold the European Union’s cap on bankers’ bonuses after a complaint by Britain.

The EU law limits a bonus to a sum that is no more than a banker’s fixed pay, or twice that level with shareholder approval. The aim is to curb excessive risk-taking in banking that led to the financial crisis.

The adviser to the court, known as the advocate general, found that the limit on banker bonuses was valid and did not restrict the total amount of pay.

Advocate general opinions are non-binding but generally followed at least in part by the court in most cases.

“In his opinion today, Advocate General Niilo Jaaskinen suggests that all the UK’s pleas should be rejected and that the Court of Justice dismiss the action,” the ECJ said in a statement.

Britain had argued that the law, which will affect bonuses that are handed out in early 2015, goes beyond the EU’s treaty powers by impinging on pay.

The full court is expect to issue its ruling on the UK challenge in early 2015.

The opinion marks a setback for Britain and could give more ammunition to anti-EU campaigners who object to having decisions imposed by Brussels. The UK Independence Party, which rejects the influence of the EU over Britain, is hoping to win a vote on Thursday that would give it a second parliamentary seat.

Reuters