Bankers’ bonuses should be capped at 50 percent of their pay

Bankers’ bonuses should be capped at 50 percent of their pay, lawmakers on a European Parliament committee said, as they voted on tougher capital and remuneration rules for banks.
Directors at banks that received public funds would also have their salaries capped at 500,000 euros ($616,000), and at least 40 percent of any bonus would be deferred for five years, under the measures approved by the assembly’s Economic and Monetary Affairs Committee in Strasbourg, France yesterday.
“If bankers and traders want to leave and go to other jurisdictions, it just shows that they do not have confidence in their own performance,” Sharon Bowles, chairwoman of the committee, said in an e-mailed statement today. “To those that would leave I say good riddance.”
Lawmakers around the world have blamed bonuses for the excessive risk-taking that contributed to the worst financial crisis since World War II. Sweden proposed laws last year that would force bankers in Europe to defer part of their bonus for three years and receive at least 50 percent in shares.
The plans for bankers’ pay will be voted on by the whole EU Parliament in July. The measures are proposed changes to draft rules on bank capital published last year by the European Commission, the 27-nation EU’s executive body.
‘Short-Sighted’
“I think it’s extremely short-sighted,” David Buik, a market analyst at inter-dealer broker BGC Partners in London, said in a telephone interview today. “I understand the political expediency, I’m quite happy with capital requirements, but don’t kill off invention and innovation.”