Excessive bank bonuses keep flowing despite ban
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.