(Bloomberg) --

Leading London financiers now expect the U.K. to rewrite European Union restrictions on banker bonuses as a way to attract talent after Brexit.

The nation is beginning to embrace the freedom to set its own policies outside the EU and is no longer consumed by efforts to ensure British regulation comports with those of the 27-member bloc, Bruce Carnegie-Brown, chairman of Lloyd’s of London, said Tuesday in an interview with Bloomberg journalists in New York. A limit on banker bonuses relative to base salaries is among the EU’s most prominent curbs on the financial industry.

“One of the things that most spooked them about London becoming more competitively attractive for talent was our willingness to change that,” Carnegie-Brown said of the EU. It’s now time to “make it easier for people to be compensated in the way that you’d expect,” he said.

Still, that doesn’t mean U.K. regulators will be turning a blind eye. The Prudential Regulation Authority has challenged banks to justify compensation packages and pushed back against some decisions to reward top earners deemed to have engaged in excessive risk-taking related to last year’s collapse of Archegos Capital Management, Bloomberg reported earlier Tuesday.

Read more: BOE Pushing Banks to Cut Staff Bonuses Linked to Archegos

The EU pay restrictions forced U.S. banks to implement different compensation models in New York and Europe, complicating their operations, Carnegie-Brown said. 

“We haven’t changed that rule in the U.K. -- yet,” Carnegie-Brown said, adding that he expects a change will happen.

Carnegie-Brown was visiting the U.S. along with two of the top lobbyists for Britain’s financial sector -- Catherine McGuinness, policy chair of the City of London Corp., and Miles Celic, chief executive officer of TheCityUK.

Other highlights from their interview:

  • On the EU’s decision to end access to London’s clearinghouses in 2025, McGuinness said it’s important to note that euro-denominated contracts are just one type of business settled in the City. “It would be a hit we wouldn’t want if all euro-clearing went elsewhere, but it’s not the whole story,” she said. “It’s only a small part of a much, much bigger picture.”
  • Celic said New York could be “a big winner” from Brexit if what results is a “low-access, high-friction” relationship between the U.K. and EU on financial services.
  • Carnegie-Brown sees Hong Kong’s role as a pan-Asian financial hub being challenged. “My medium-term view would be, depending on how the geopolitics evolve, Hong Kong will remain really important as a gateway into greater China,” he said, “but it might lose its preeminence as a gateway into the rest of Asia, and that opportunity is up for grabs with Singapore as the most obvious competitor destination for that business.”

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