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

Santander boss Ana Botín told the Financial Times’ Global Banking Summit on Monday that she supported the government’s decision to scrap the cap on bankers bonuses.

The executive chair of Spain’s largest bank said the move would more closely align the interests of bankers and their shareholders.

The UK limit on banker bonuses was introduced in 2014, when the UK was part of Europe, and was designed to curb excessive risk-taking after the financial crisis. The rules, which were also introduced across the European Union, capped bankers’ bonuses to twice their base pay.

The government scrapped the rule last month in an effort to boost the Square Mile’s post-Brexit competitiveness, although opponents argue that bankers are not likely to accept cuts to fixed pay for a rise in more volatile bonuses.

Botín told the Global Banking Summit Santander would consider changing how it pays staff in London after the scrapping of the cap.

“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,” she said. “I’m sure we will adapt to that.”

Botín said scrapping the cap would allow “a better alignment with shareholders, so it would be positive, of course.”

Industry executives have said bonus caps lead to inflated fixed pay, making it more difficult to manage costs.

The removal of the cap in the UK is likely to have a much bigger impact on investment banks, where earnings tend to be more volatile.

The Conservatives’ political opponents and some unions criticised the decision in October for rewarding the country’s top earners while many workers were struggling with the high cost of living.