EU to pursue compromise agreement on curbing bonuses for bankers
The European Union will seek to broker a tentative compromise on curbs of banker bonuses today as diplomats and lawmakers attempt to overcome eight months of conflict on how to apply Basel rules to the bloc’s lenders.
The Republic will draft revised proposals on bonuses ahead of today’s negotiation meeting, according to two EU officials not authorised to be cited by name. Governments have accepted that any deal on the Basel law will need to contain binding pay rules if it is to win European Parliament approval, said the officials.
The EU has struggled to agree on legislation to apply the Basel banking standards, which were published in 2010 as part of efforts to prevent any repeat of the financial crisis that followed the collapse of Lehman Brothers.
The Republic’s proposal will amend a compromise offer discussed in December by the parliament and Cyprus, the previous EU presidency holder, said the officials. That plan would have banned bonuses greater than twice a banker’s fixed pay.
A majority vote by shareholders representing two-thirds of the bank’s ownership would have been needed to give a bonus larger than annual fixed salary. Legislators and national officials have clashed since May on bonuses, requirements for systemically-important banks, and how much freedom national regulators should have to impose their own more stringent capital measures on lenders.
Lawmakers have insisted the law include binding limits on variable pay as part of a quest to reshape lenders as utilities rather than money-making machines. The assembly’s economic and monetary affairs committee called in May for a ban on bonuses that top fixed pay. While several nations indicated at a meeting last week that they could support the December plan, it was opposed by several governments including the UK.
A spokeswoman for the Republic’s EU presidency said it would seek to settle key outstanding issues in the draft law at the meeting, and that talks are in their final stretch.
Diplomats at yesterday’s meeting reviewed a counter proposal on bonuses from the UK, said the officials. That plan would ban non-deferred cash bonuses larger than fixed salary, while granting exemptions to banks’ non-EU based subsidiaries. – (Bloomberg )