In Short

A round-up of today's other stories in brief...

Limits on EU banker bonuses

Bankers will face limits on cash payouts and the size of their bonus relative to salary from the start of next year, as European Union regulators approved laws to curb incentives for excessive risk-taking.

The rules limit bankers to receiving about 25 per cent of their bonuses in immediate cash payouts, the rest either deferred or held in shares for a minimum of three years.

Many hedge funds will avoid rules on share awards depending on their “prudential risk profile”, according to the Committee of European Banking Supervisors.

Regulators throughout the EU must adopt the proposals from the committee as part of a range of measures to rein in the risk-taking blamed for causing the worst financial crisis since the Great Depression. – (Bloomberg)

Spanish banking remains negative

The outlook for the Spanish banking system remains negative because profitability will be “severely tested” as loan demand falls and defaults and funding costs increase, Moody’s Investors Service has said.

The country’s banking industry faces a net capital shortfall of €17 billion, based on a calculation that assumes a minimum 8 per cent Tier 1 capital ratio, Moody’s said in its outlook report yesterday.

The Tier 1 ratio is a key measure of financial strength.

Banks in the country have only recognised €88 billion of losses through writedowns and use of reserves, compared with Moody’s base- case scenario of €176 billion of losses across the whole life of the industry’s loan books. – (Bloomberg)