Jump to content
House Price Crash Forum
Byron

Bank Bonus Buster?

Recommended Posts

EU law proposes sanctions for risky bank bonuses

By Huw Jones

LONDON/BRUSSELS (Reuters) - The European Union on Monday unveiled a new law that punishes banks who encourage too much risk-taking with their policies on pay, in an effort to put an end to the practices blamed for the credit crunch.

A draft law published by the European Commission tightens EU rules on bank capital and requires banks to improve disclosure of the holdings in securitised products, bidding to apply lessons from the worst financial crisis since the 1930s.

The rules, coupled with other anticipated reforms such as a cap on leverage and other types of capital and liquidity buffers, will make it harder for banks to earn high returns on their assets.

They are due to come into force in 2011 as part of wider efforts to restore confidence in the financial sector, but may yet be delayed because they will dampen banks' ability to lend and aid the economic recovery in the meantime.

"If we think it needs to be delayed further, that could be done, if we think they could have a detrimental effect on the general economy," Ruth Walters, an official at the Commission's internal market unit, told reporters.

On pay, the focus is on top officials, whose work affects the bank's risk profile, ensuring there is an "appropriate" balance between fixed and variable pay and also taking in severance pay.

"It is true that employment contracts are likely to be renegotiated and that the fixed component awarded could be higher," the Commission said.

Supervisors will not determine actual levels of pay.

The draft must be approved by the European Parliament and EU governments to become law.

Share this post


Link to post
Share on other sites
EU law proposes sanctions for risky bank bonuses

By Huw Jones

LONDON/BRUSSELS (Reuters) - The European Union on Monday unveiled a new law that punishes banks who encourage too much risk-taking with their policies on pay, in an effort to put an end to the practices blamed for the credit crunch.

A draft law published by the European Commission tightens EU rules on bank capital and requires banks to improve disclosure of the holdings in securitised products, bidding to apply lessons from the worst financial crisis since the 1930s.

The rules, coupled with other anticipated reforms such as a cap on leverage and other types of capital and liquidity buffers, will make it harder for banks to earn high returns on their assets.

They are due to come into force in 2011 as part of wider efforts to restore confidence in the financial sector, but may yet be delayed because they will dampen banks' ability to lend and aid the economic recovery in the meantime.

"If we think it needs to be delayed further, that could be done, if we think they could have a detrimental effect on the general economy," Ruth Walters, an official at the Commission's internal market unit, told reporters.

On pay, the focus is on top officials, whose work affects the bank's risk profile, ensuring there is an "appropriate" balance between fixed and variable pay and also taking in severance pay.

"It is true that employment contracts are likely to be renegotiated and that the fixed component awarded could be higher," the Commission said.

Supervisors will not determine actual levels of pay.

The draft must be approved by the European Parliament and EU governments to become law.

I suppose the UK will oppose this because we make so much money from financial services and do not want to discourage teh sector :lol::lol::lol::lol:

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   289 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.