Cap on bankers' bonuses proposed
Bankers' bonuses could soon be dictated by shareholders under new proposals put forward by the European Commission, internal markets commissioner Michel Barnier's spokesman has said.
The European Parliament wants to cap bonuses so they cannot exceed salary levels. Compromise will be sought next week during discussions and new legislation could be wrapped up within weeks.
"The bonus culture had an impact in terms of giving incentive to banks to take excessive risks and when liquidity also dried up in the market that led to disaster, as we have seen," Commissioner Barnier's spokesman said.
"So we want to legislate on the bonus culture to change that culture. It's important for the efficiency of the bank there's also a moral and ethical issue involved here about excessive payments to bankers we have seen in the past."
The spokesman said the Commission's proposal would give more responsibility to shareholders to define the portion of salary paid to bankers as bonuses. "The shareholders would have to have a decisive vote on that," he said.
The Parliament is advocating a "one-to-one" ratio, whereby bonuses could never be higher than fixed salary in terms of cash payments.
"So we're looking at now how to find a compromise between the different proposals on the table. This is part of the negotiation process now between the Council, the Parliament and the European Commission."
He said the matter would be discussed next week and he hoped a conclusion would be reached within months if not weeks.