Reply #3: Europe puts limits on banker bonuses

[jpak]

Source: Christian Science Monitor


A crackdown on unlimited bonuses for bankers and financial traders was approved today by members of the European Parliament in a move that gives the 27-country European Union one of the world’s toughest regimes in the field.

The new rules are both a response to public outrage at the size of the payouts and a bid to tackle a risk-taking culture blamed for the global financial meltdown.

The EU will require 40 percent to 60 percent of bonuses to be deferred for three to five years. Half of any upfront bonus will be paid in shares or in other securities linked to the bank’s performance so that the money can be recovered if the bank runs into difficulty. Banks that get government bailouts will have to report how many of their employees make more than 1 million euros ($1.26 million).

But while today’s vote rubber stamps measures that were originally agreed to by the G20 nations and European Union member states last month, much will depend on how strictly regulators in individual EU states choose to enforce the rules after finance ministers meet next week to endorse the new regime.

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Read more: http://www.csmonitor.com/World/Europe/2010/0707/Europe-puts-limits-on-banker-bonuses