Ex­ces­sive bank bonuses keep flow­ing de­spite ban

Kathimerini English - - Business & Finance -

Italy, Spain, Greece and four other Euro­pean Union na­tions have failed to im­ple­ment rules on bank bonuses aimed at curb­ing ex­ces­sive risk­tak­ing and pre­vent­ing staff from be­ing re­warded for poor re­sults. Poland, Por­tu­gal, Slove­nia and Slo­vakia have also missed a Jan­uary 1 dead­line to adopt the re­mu­ner­a­tion lim­its, the Euro­pean Com­mis­sion said in a state­ment on its web­site. The Com­mis­sion gave the coun­tries two months to com­ply. “If com­mon rules are not up­held at the same level across the EU, this would leave room for cur­rent loop­holes to be ex­ploited,” the Com­mis­sion, the 27-nation bloc’s ex­ec­u­tive arm, said to­day. The EU law, ap­proved last year, re­stricts cash pay­ments of bank bonuses and forces len­ders to dis­close the num­ber of peo­ple earn­ing more than 1 mil­lion eu­ros ($1.4 mil­lion). Michel Barnier, the EU’s fi­nan­cial ser­vices com­mis­sioner, has said fur­ther ac­tion may be needed in the re­gion to pre­vent pay­outs at “un­jus­ti­fi­able lev­els,” claim­ing that len­ders had failed to heed calls for mod­er­a­tion in this year’s bonus round. Un­der the EU rules, as much as 60 per­cent of a bonus pay­out for risk­tak­ers and se­nior man­agers must be de­ferred for at least three years, and half of the re­main­ing amount must be in the form of shares. Ten na­tions have also failed to “fully” put in place mea­sures in the same law to in­crease the cap­i­tal re­serves that len­ders must hold against po­ten­tial losses. Italy, Spain, Greece, Poland, Por­tu­gal, Slove­nia, Bel­gium, Lux­em­bourg, Swe­den and Slo­vakia may face legal ac­tion un­less they fully ap­ply the cap­i­tal rules, the Com­mis­sion said. “If the na­tional authorities do not no­tify the nec­es­sary im­ple­ment­ing mea­sures” on the bonus and cap­i­tal rules “within two months, the Com­mis­sion may re­fer the mem­ber states con­cerned to the Court of Jus­tice,” it said yes­ter­day.

(Bloomberg)

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