London  Banks  Dodge  European  Rules  By  Christopher  Wakem  February  20,  2014    Banker  bonuses  are  starting  a  battle  in  Great  Britain’s  capital.  Regulators  have  been  limiting  bonuses  since  the  2008  financial  crisis  for  fear  of  bankers  and  investors  taking  big  risks  if  they  have  a  big  payout  in  hand.  The  European  Union  has  taken  this  course  of  action  a  bit  further  by  limiting  banker  bonuses  to  two  times  their  salary  or  less.    However,  outside  the  EU,  large  banks  in  London  want  to  work  around  these  restrictions.  These  big  players  include  Goldman  Sachs,  Bank  of  America,  Merrill  Lynch,  and  Barclays.  They  are  doing  so  by  manipulating  pay  packages  that  will  satisfy  both  regulators  and  employees.  The  new  pay  packages  mean  that  employees  will  no  longer  get  big  bonuses,  but  they  will  have  role-­‐based  pay.  You  can  think  of  this  a  ‘reviewable  salary.’  In  reality,  the  big  banks  are  simply  disguising  bonuses,  which  does  not  please  European  lawmakers.    The  big  banks  in  London  may  retort  that  the  European  bonus-­‐cap  law  puts  them  at  a  disadvantage  in  the  global  market  place  because  traders  in  New  York,  Hong  Kong,  and  Singapore  do  not  have  such  laws.  Right  now  the  London  banks  have  the  support  of  the  British  Parliament  because  they  are  in  the  process  of  suing  to  block  the  law.  Although  the  banking  industry  usually  pays  more  based  on  performance,  they  have  been  advised  by  their  British  regulator  that  payments  may  pass  if  they  are  non-­‐contractual  and  not  based  on  performance.  Barclay’s  chief  executive,  Antony  P.  Jenkins  has  stated  that  role-­‐based  pay  “was  not  performance  related,  but  an  adjustment  to  fixed  pay.”    The  European  Banking  Authority  is  now  working  on  guidelines  to  help  clarify  what  constitutes  “fixed  and  variable”  compensation.  Although  London  banks  are  slightly  protected  by  the  British  parliament  for  now,  the  European  Commission  has  the  right  to  investigate  noncompliance  and  bring  violations  to  trial  at  the  European  Court  of  Justice.    Christopher  Wakem  is  a  London-­‐based  legal  consultant/contractor  who  has  worked  in  the  independent  bar,  private  practice,  and  in-­‐house  sectors.  He  has  obtained  law  degrees  from  the  University  of  Sheffield  and  University  College.  Mr.  Wakem  has  provide  advice  in  a  wide  array  of  matters,  both  contentious  and  non-­‐contentious,  through  his  company  Lightbringer  Solutions  Ltd.  Chris  has  helped  companies  large  and  small  establish  risk  management  policies,  develop  start-­‐up  procedures,  negotiate  framework  agreements,  secure  insurance  coverage,  and  deal  with  Anti-­‐Money-­‐Laundering  and  Anti-­‐Bribery  and  corruption  matters.