16th September 2022
Bite-sized business news from the UK and beyond
- Banker bonus caps could be lifted
- Billionaire founder gives away company
Banker bonus caps could be lifted
The new chancellor Kwasi Kwarteng is considering removing the limits on banker pay in a bid to boost the City of London’s competitiveness, according to reports in the Financial Times.
How did we get here?
In 2014 the EU introduced caps to banker bonuses across the region believing that inflated pay packets led to excessive risk taking that caused the global financial crisis in 2008.
Under the legislation bonuses can’t exceed twice a banker’s salary. So if a bank wants to pay someone £3m, it has to pay a salary of at least £1m.
But the British financial services sector has long opposed the rule, arguing that it undermines London’s position as a global banking centre. Now the UK has left the EU it’s able to revoke the conditions.
The idea has been raised before when Boris Johnson was prime minister but was canned as he feared the backlash of increasing banker pay during a cost of living crisis.
But his successor Liz Truss has called the City of London ‘the jewel in the crown’ of the UK economy and is keen to boost the country’s appeal to international talent. Also earlier this month the chancellor laid out his "unashamedly pro-growth plan" for the economy at a gathering of senior bankers.
Zooming out: The Treasury says no decision has been taken. Removing a cap on the pay of high earners in the City when millions are struggling would undoubtedly provoke criticism. But the Conservative government has a history of deregulating the financial service industry and are widely expected to unveil a suite of reforms as soon as next week.
Other stories to keep you in the loop
- Mini-budget expected on 23 September to reveal details of new PM's fiscal plans
- Shell CEO resigns takes 2022 tally of FTSE 100 boss departures to 18
- John Lewis suffers first half loss of £99m and warns of risk to staff bonuses
- Kanye West ends partnership with retailer Gap
- Trainline ticket sales boom as travel app focuses on international expansion
- 100 flights cancelled as Heathrow cuts schedule on day of Queen's funeral
Billionaire founder gives away company
In a rare move this week Patagonia founder Yvon Chouinard announced he’s given away his outdoor suppliers company to a charitable trust so profits can be used to fight climate change.
How did we get here?
Chouinard, 83, founded the high-end activewear brand in 1973 and grew to a business with $1.5bn in annual sales and $100m in profit. The company is known for its strong sustainability conscious approach and has been a vocal supporter of climate activist for many years.
The money Patagonia makes after reinvesting in the business will now be distributed to a trust to help fight the environmental crisis. The structure was designed to avoid selling the company or taking it public, which could have meant a change in its values. The brand's website now states: "Earth is now our only shareholder."
It’s an unprecedented move by a business leader, but then again, Chouinard’s never really been into that lifestyle. “I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he once told the New York Times.
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