Santander boss says scrapping UK bankers’ bonus cap ‘good news’ for industry

The boss of Santander said it was good news for the industry (Brian Capon/British Bankers’ Association/PA)

The boss of Santander has said the scrapping of the UK’s bankers’ bonus cap is good news for the industry, as she welcomed a similar move elsewhere in Europe.

Ana Botin, the banking giant’s executive chairwoman, said it “makes a lot of sense” to reward staff based on their performance.

The decision to remove the limit on bankers’ annual payouts came last month, after the Bank of England’s regulatory arm said the cap was a factor holding back talented workers coming to the UK.

The Prudential Regulation Authority (PRA) also said that limiting payouts was having the opposite effect of driving up staff salaries that are not linked to the long-term performance of a firm.

Axing the cap came in a post-Brexit shake-up of the rules, a year after former chancellor Kwasi Kwarteng said the decision would encourage global banks to create jobs, invest and pay taxes in the City.

But the move was criticised, including by the Labour Party, which described it as “out of touch” while households grapple with higher living costs.

Some employment lawyers said it gave more freedom and flexibility to banking firms, but others said it could create more disputes or instil a culture of greed.

Ms Botin, speaking to the Financial Times at the Global Banking Summit, said: “It’s a business where you should be compensated in a variable way, so I think it’s good news for our industry, it makes a lot of sense.

“I’m sure we will adapt to that.”

The regulations were introduced by the EU in 2014 in a bid to avoid excessive risk-taking after the 2008 financial crisis, and it is still in place in EU countries.

Ms Botin said that scrapping the EU cap could allow “better alignment with shareholders” which would be a “positive” move.