European agreement to cap bank bonuses

Scofflaw

Currently rumbling forward through the pipeline:

The UK financial sector was dealt a withering blow on Wednesday night when the European Union agreed on moves to slash the bonuses that may be paid to bankers, defeating strong Treasury opposition to the new rules.

A meeting of officials from the 27 countries of the EU with MEPs and the European commission agreed to cap bankers' bonuses broadly at a year's salary, with the proviso that the bonus could be doubled subject to majority shareholder approval. The decision to limit the annual bonuses that may be paid to bank employees came despite stiff British resistance to the move and is certain to have a strong impact on the "fat cat" culture of the City of London, the EU's financial centre.

http://www.guardian.co.uk/business/2013/feb/28/european-union-cap-bankers-bonuses

Not quite sure where this is in the legislative pipeline, but it looks like the only thing left is the Council vote.

Will it achieve anything?

cordially,
Scofflaw

antoobrien

Scofflaw wrote: »

Currently rumbling forward through the pipeline:



http://www.guardian.co.uk/business/2013/feb/28/european-union-cap-bankers-bonuses

Not quite sure where this is in the legislative pipeline, but it looks like the only thing left is the Council vote.

Will it achieve anything?

cordially,
Scofflaw

Might help cap some of the idiotically high "pay" that's been handed out over the past 10 years, but the devil will be in the detail e.g. will this just be applied to cash or will shares, options etc. be included?

Nody

Will do nothing except raise the base salary of the top brass people and moving the bonus trade outside of EU but all the politicans can stand proud and rant about banks in their next election showing "how they went hard on the banks".

Even something simple as "no more then 10x lowest salary in company" (I think France had/has implemented this) can easily be gotten around via multiple legal entities, hired in as "consultant" etc. as well before someone suggest something along those lines.

Manach

Prior to the banking crisis, I'd have said it does seem to be State interference in the running of the private companies and mostly done to please the voters. Post banking crisis, given the state of the economy, will it change the very poor perceptions of risk these type of bankers seem to have with other people's money.

KyussBishop

It's something anyway, but says a lot that it took 5 years for this clampdown on excess to happen, and even then it's only bringing things back in line with what is sensible (as well as receiving not just apathy in politics, but direct political opposition too).

Would be nice to see widescale fraud investigations and prosecution next, and actually see some of the people responsible for various parts of the crisis (who likely have been receiving these bonuses), go to jail; it's not a good indication of the state of things, that telling bankers they can only have 2x their salary (and 3x if the shareholders agree), is an applaudable achievement.

Nody wrote: »

Will do nothing except raise the base salary of the top brass people and moving the bonus trade outside of EU but all the politicans can stand proud and rant about banks in their next election showing "how they went hard on the banks".

Even something simple as "no more then 10x lowest salary in company" (I think France had/has implemented this) can easily be gotten around via multiple legal entities, hired in as "consultant" etc. as well before someone suggest something along those lines.

That there are loopholes doesn't mean it should not be clamped down on, it means the loopholes aught to be closed as well; if more loopholes are then discovered, close them too, and the cost of avoidance increases as well, helping to clamp down on it.

Even if you never fully manage to clamp down on something, regulation to stop it is a success when it increases the difficulty and cost of avoiding the rules, and it more steadfastly cements the spirit behind the law/regulations as well (which in itself, is as good a reason as any, to do it and keep on strengthening the laws which enforce it).

Fratton Fred

How far does this go? If I work in the VC arm of a bank and my pay is mainly performance related, will my performance bonuses stop when they hit the cap?

And why only banks, loads of multinationals will have directors earning four or five times their basic pay.

Like Boris has said today, this sounds like good news for Zurich and Singapore.

Cookie_Monster

What the point of limiting it to just banks? Sounds like a popularity stunt and nothing more.

rumour

Scofflaw wrote: »

Will it achieve anything?

Yes, move the banking community to a base elsewhere. Plenty of countries up for it which have more appetite for commerce than the bankrupt countries of EU and USA.

EU delusions of grandeur, but hey its democracy in action.