By Phoebe Seers and Iain Withers
LONDON (Reuters) -Senior bankers in Britain will receive their bonuses earlier than previously thought, the Bank of England said on Wednesday, after halving the length of time needed to qualify as part of efforts to boost UK competitiveness.
In a consultation on how rules introduced after the financial crisis should be changed, the Bank had recommended a cut to five years, but on Wednesday said the time bankers must wait for the full amount of their bonus would be reduced to four years from eight.
The changes take effect from Thursday, in time for 2025 pay awards and any other awards made but not yet fully paid. They also exclude some bankers from the bonus-deferral regime.
The BoE’s Prudential Regulation Authority said the new rules would allow banker bonuses to be vested on a pro-rata basis from the time they are granted.
British regulators had already previously scrapped a cap on banker bonuses that had dated from Britain’s membership of the European Union.
“These changes are the latest example of our commitment to boosting UK competitiveness,” Sam Woods, deputy governor of Prudential Regulation at the Bank, said.
Regulators imposed rules to defer senior manager bonuses after the 2007-2009 financial crisis triggered concerns that year-end cash bonuses could encourage bankers to take excessive risks and undermine the global financial system.
Critics had said the rules put Britain at a competitive disadvantage to rival financial centres, where most bonuses are typically subject to deferral periods of three-to-five years.
Bank lobby group UK Finance said the changes would give companies more flexibility.
“A more proportionate approach here will help with attracting global talent and support the competitiveness of the UK’s financial services sector,” a UK Finance spokesperson said.
(Reporting by Phoebe Seers and Iain Withers, Editing by Barbara Lewis)
