European Union caps bankers’ bonuses

[Redfairen]

Source: Financial Times

Bankers’ bonuses are to be capped at two times bankers’ salaries and banks will be subject to a strict transparency regime, under a provisional EU deal that includes minimal concessions to cushion the most severe pay crackdown since the 2008 financial crisis.

In a serious setback for the UK’s fight to head-off some of the remuneration curbs, the European parliament late on Wednesday night secured agreement on a mandatory 1:1 ratio on salary relative to variable pay, which can rise to 2:1 with explicit shareholder approval.

.......

The breakthrough in talks between the European parliament and Ireland, which negotiates on behalf of EU member states, paves the way to enact the so-called Basel III capital rules, an internationally agreed blueprint for avoiding another banking crisis.

......

As well as a prized bonus cap, which would go into effect in January 2014, parliament also prevailed in requiring banks to reveal their taxes and profits on a country-by-country basis from 2015, as long as the extra transparency is not judged by the European Commission as an impediment to inward investment.

Read more: http://www.ft.com/cms/s/0/ba3a37f6-80f0-11e2-9c5b-00144feabdc0.html#axzz2MA2jil5C

[another_liberal]

1. This is a good start . . .

This is a good start, however, much more control over the mega-bankers remuneration is still needed. Nevertheless, I would love to see those fatcats at Chase and Goldman Sachs get this kind of treatment. Can you just imagine how their bought-and-paid-for Republican shills would wail and gnash their teeth!

[Turborama]

2. That article is for subscribers to FT only. Here's an alternative...

BBC:

EU agrees to cap bankers' bonuses
http://www.bbc.co.uk/news/business-21608938

[alp227]

5. OR add "liveweb.archive.org/" before the ft.com url.

As I do when posting links to financial times.

[Morganfleeman]

3. Not a great move

As someone who works in the European financial industry, my view, bad move. Banks already have in place clawback provisions, which I think are good policy. Banks are utilising those clawbacks (eg banks involved in the LIBOR scandal), which is the right way to handle remuneration.

This law will inevitably lead to banks increasing the fixed portion of a bank employee's compensation. This isn't going to reduce compensation and anyone who believes that is deluding themselves. Banks are just going to have higher fixed costs, in a downturn means firing more people rather than giving them the flexibility to vary the variable component of pay.

Great populist move on paper but ultimately this does nothing to temper risk taking or make the system safer. Base salaries in Europe are significantly higher than they were in 2008, largely due to restrictions on bonuses, precisely the exact opposite intended result of well intended legislation.

[awoke_in_2003]

4. Twice their salaries?....

The last bonus I got was three years ago. It was 1% my annual salary (not including shift differential).

[pampango]

6. EuroNews: UK bankers attack EU plan to cut their bonuses - and in an unrelated story

EU plans to cap bankers’ bonuses have been slammed in London’s Canary Wharf, home to many global banks. The provisional deal would see bankers face an automatic cap set at a par with their salaries which could only be raised if the bank’s shareholders voted in favour.

But many in the British capital see it as an unfair restriction on their trade.

http://www.euronews.com/2013/02/28/uk-bankers-attack-eu-plan-to-cut-their-bonuses/

Britain to oppose bank bonus cap

Britain will oppose EU legislation capping bank bonus payments when finance ministers meet in Brussels next week. Prime Minister David Cameron's spokesperson said Thursday that EU rules should allow flexibility at national level, claiming that Britain "has some of the toughest remuneration requirements in the world."

http://euobserver.com/tickers/119246