UK's million-pound bankers hit with new bonus clampdown

Britain's financial services regulator is to hit bankers earning more than £1 million ($2.2 million) a year with a new restriction that will apply to this year's bonuses, as it emerged the US investment bank JP Morgan Chase is to defy calls for restraint on pay by sharing out a US$29 billion bonus.

The revelations are likely to ensure lucrative rewards for bankers remain in the political spotlight ahead of the British general election before the end of June. Over the weekend, Boris Johnson, the Mayor of London, waded into the row by saying in a letter that up to 9000 of Britain's finance industry's top brass could leave the country because of taxation on bonuses.

Last year, the Chancellor, Alistair Darling, unveiled plans for a windfall tax of 50 per cent on bankers' bonuses over £25,000 in the pre-Budget report.

The Financial Services Authority (FSA) is thought to have up to 5000 bankers in its sights with the new restrictions, applying to bonuses being paid in the coming weeks for 2009.

The FSA declined to comment but under its remuneration code proposals, any employee of a British bank who earns a seven-figure package will have to defer 60 per cent of their bonus for three years, with shares being a key way of doing so.

The FSA first published details of its remuneration code in August. But the FSA's guidance was reported to have applied only to employees of a bank involved in the direct running of the financial institution.

This would have covered those earning more than £500,000 a year, but not high-flying traders and other senior executives. It is thought that some banks have tried to circumvent the FSA's intention for the code to apply to "people with significant influence" and the regulator has tightened it up to cover individuals earning more than £1 million in salary and bonuses.

Meanwhile, JP Morgan - which is forecast to report annual pre-tax profits of about US$15 billion this week - is reported to be set to deliver a compensation pot of US$29 billion.

But any such payment will include payouts and benefits to all staff, including those in its retail branches. The jump in the JP Morgan bonus payout - which is estimated to be up by 28 per cent on 2008 levels - also reflects an increase in staff.

- INDEPENDENT