Banks ignored on EU bonus calls
Friday 10 December 2010 - by Nicola York
Trade bodies say the timetable for implementation of new EU bank bonus rules is 'very tight' and that the US and other jurisdictions must coordinate their reforms with the EU to ensure a level playing field.
Under the guidelines, national regulators will have the power to claw back bonuses from senior management staff if they are later found to have caused losses to financial firms as a result of their risk-taking.
The BBA says: "Taken together, these rules mean that for the key people, whatever is paid in bonus is half in shares, mostly locked away for several years, and any cash will go straight to the tax man. This represents a huge change away from the bonus arrangements of the past."
The BBA says that reform of the remuneration system must be globally coordinated to avoid the migration of staff or financial institutions to jurisdictions with lighter rules.
The Association for Financial Markets in Europe says it supports measures that will reduce risk in the financial system but agrees with the BBA that banks in the EU will not be operating on a level playing field.
AFME chief executive Simon Lewis says: "Our members will, of course, comply with the new rules, although the timetable for implementation is very tight.
"These requirements will mean that banks operating in Europe, and European banks operating elsewhere in the world, will be at a competitive disadvantage unless there is recognition of the need for a global agreement on compensation practices."
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