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 it halved the length of time needed to qualify as part of efforts to boost UK competitiveness.
The changed rules will also exempt bankers earning up to 660,000 pounds ($884,000) from any restriction, and is the latest effort by authorities to dismantle regulations set up after the global financial crisis.
In a consultation on how such rules 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.
CHANGES TAKE EFFECT FROM THURSDAY
The changes take effect from Thursday, in time for 2025 pay awards and any other awards made but not yet fully paid.
Going forward, the deferral rules will only apply to senior bankers with total pay of at least 660,000 pounds or where bonuses constitute at least a third of their pay. Until now, they applied to bankers with a bonus of 44,000 pounds or more.
The Bank’s Prudential Regulation Authority said the change would allow banker bonuses to be vested on a pro-rata basis from the time they are granted.
British regulators had 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.
The loosened rules also fit with UK finance minister Rachel Reeves’ agenda of cutting red tape to boost the economy.
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 and support the industry’s international competitiveness.
($1 = 0.7465 pounds)
(Reporting by Phoebe Seers and Iain Withers, Editing by Barbara Lewis)
