The European Parliament has approved curbs on
bank bonuses, a move EU finance ministers are set to endorse next Tuesday. The law would take effect from the start of next year. Only part of a bonus could be paid up front, with the rest deferred by up to five years.
The new rules also force banks to set aside more capital against repackaged securities held on their trading books. British Labour MEP Arlene McCarthy steered the measures through parliament. She said that, in spite of bailouts of 3.9 trillion euros, banks have not taken appropriate action.
McCarthy, with the Socialists & Democrats group, said: “For larger bonuses, there will be a maximum cash payment of 20 percent and for smaller bonuses, obviously, 30 percent. What we are trying to tackle in this proposal is not allowing, basically, people to walk away with multi-million pound bonuses, leaving the bank behind in dire financial straits and under-capitalised and then having to be bailed out by the taxpayer.”
The bloc’s financial services chief who drafted the law, EU Internal Market Commissioner Michel Barnier, said banks needed to change what led, in many cases, to excessive risk-taking — contributing to the financial crisis.
Liberal group President in the European Parliament Guy Verhofstadt said: “[It], rightly, wants the European authority to have the last word in this matter of financial markets. The entire financial crisis showed that national authorities do not work well, and that we need an authority at European level.”