Brexit: Banks shun Amsterdam move over Dutch bonus caps
Many banks and financial institutions moving to Europe after the Brexit, are shunning Amsterdam due to the Netherlands' cap on bonuses. While the rest of the European Union capped bonuses at 100 percent of the fixed salary, the Netherlands' cap is 20 percent of the fixed salary. The banks fear losing talent to the competition, being forced to pay irresponsibly high salaries to keep employees and do not feel welcome in the Netherlands, Financieele Dagblad reports after talking to a number of companies assisting banks in their move to the EU mainland.
Both Prime Minister Mark Rutte and Finance Minister Jeroen Dijsselbloem promised that foreign companies wishing to move to the Netherlands can easily avoid this bonus cap through an exception placed in the law. But according to Constant van Tuyll of Van Doorne lawyers - a firm that advised many companies on moving to the Netherlands - the exception is very hard to use. In order to qualify for a 100 percent bonus cap, the financial institution needs to employ 75 percent of its staff outside of the Netherlands, but still inside the EU. "This condition is rarely fulfilled", Van Tuyll said to the newspaper.
According to the lawyers' firm, business bankers in particular don't dare to move to Amsterdam, mainly because of the unpredictability of their deals. "Some years they have a lot of deals, other years hardly any", Van Tuyll explained to the newspaper. "If they have to give their deal makers a higher fixed salary, they run a risk." Financial institutions also worry about losing talent competitors in other EU countries, where higher bonuses can be offered. The Netherlands' image of bankers as "grabbers" also leave financial institutions feeling unwelcome, Van Tuyll added.
"Nobody can explain why the Netherlands has a 20 percent rule. It was never explained why 100 percent is insufficiently effective", Van Tuyll said.
As a result, many banks that considered Amsterdam decided to move somewhere else. U.S. bank JPMorgan Chase, British bank Standard Chartered and Japanese bank Nomura all opted for Frankfurt. HSBC is moving to Paris. And Bank of America is opening an office in Dublin.
Kasja Ollongren, Amsterdam alderman of Economic Affairs, previously warned that the bonus cap will deter companies from Amsterdam and is not surprised by this development. "This was to be expected", she said to FD. "The Netherlands made the bonus cap stricter than the rest of Europe. If that is a reason not to choose the Netherlands, we have to accept it."
Instead of continuing to call for an equal bonus cap across the EU, Ollongren is now focusing on what makes Amsterdam attractive to companies other than banks. She is talking to asset managers and fintech companies, among others. "The startup climate is good here, which is important for this group. So even though the big banks are avoiding the capital because of the bonus regulation, Amsterdam is still interesting."