British finance minister Kwasi Kwarteng could remove the cap on bankers’ bonuses that was introduced after the 2008 financial crash, reported the Financial Times.
However, no final decision has been taken yet on the matter, unnamed sources privy to the discussions told the publication.
The move is part of the new government’s major post-Brexit reforms and London foremost investment hub for global banks and top banking talent.
According to the source, a statement could be made as early as next week.
The existing cap, adopted by all the EU members, restricts the bonuses at two times an employee’s annual salary.
It remained in force in the UK despite it leaving the EU in 2020.
Industry players in London have been complaining about the cap as it encourages higher base pay that increases banks’ fixed costs.
People who oppose the lifting of the cap say that unrestricted bonuses could lead to the unnecessary risk that was created in the financial slump of 2008.
However, people favouring the lift argue that reforms in the existing rules could hold senior managers accountable for any misconduct, both personally and criminally, if required.
Bank of England’s former member of monetary policy committee Andrew Sentence was quoted by BBC as saying that the new plan “sends a rather confused signal when people are being squeezed in terms of the cost of living, and the government is trying to encourage pay restraint in the public sector.”