Morning Coffee: The bonus cap probably won't survive in Europe, either. A chance to go through some billionaires’ bathrooms

efinancialcareers.com:

If you want to understand the banking industry over the long term, one of the most important principles to learn is that of the “regulatory pendulum”.  Things come and go, every action has an eventual reaction.  Deregulation brings speculation, speculation causes crisis, crisis leads to harsh regulation.  But after a while, every financial centre realises that they might be able to steal a bit of market share by relaxing the rules a little bit, and the deregulatory cycle begins to turn again.

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The principle of the pendulum almost never fails, and so it’s as close as you can get to a certainty that the European bonus cap will, one day, be removed.  When that day might be, remains hard to tell.  But it’s becoming increasingly obvious that the competitive forces which will eventually lead to its demise are already strongly at work.

Germany, for example, is drawing up plans to get make it easier to dismiss high earners in the finance industry.  This is currently extremely difficult to do; German labour law is set up to try to avoid redundancies whenever possible, and traders and dealmakers on eight-figure bonuses benefit from this protection just the same as metalworkers on €20 an hour.  Whenever there are redundancies in the air at Deutsche Bank, the question of “who’s got a German contract” tends to become hot gossip on London trading floors – it suddenly matters a great deal whether one of your colleagues is, in legal terms, an employee of the UK subsidiary or posted from head office.

Why is Germany thinking of changing this status?  Most likely, because they have heard senior people complaining about the equivalent protections in France. In the aftermath of Brexit, big