Bri­tish banks fight against new rules on bonus pay­ments

The Pak Banker - - Front Page -

LONDON: The UK bank­ing sec­tor is fight­ing a rear­guard ac­tion against new rules on bonus pay­ments ahead of ma­jor an­nounce­ments by both the Euro­pean Union (EU) and the Fi­nan­cial Ser­vices Author­ity (FSA) on re­mu­ner­a­tion ex­pected in the next two weeks.

Se­nior bank­ing sources have re­vealed that a num­ber of banks are concerned that new rules ban­ning guar­an­teed bonuses will ef­fec­tively be a "poacher's char­ter" which will mean a loss of tal­ent from Bri­tish banks.

The FSA is set to pro­pose that banks and other firms in the fi­nan­cial sec­tor will not be al­lowed to of­fer guar­an­teed bonuses of more than one year. A draft of the new rules, pub­lished in July, said: "Guar­an­tees may only be given in ex­cep­tional cir­cum­stances to new hires for the first year of ser­vice."

Bank­ing of­fi­cials point out that be­cause the guar­an­tees can be given only to peo­ple be­ing re­cruited it will be harder to re­tain tal­ent. "What if one of your peo­ple is of­fered a guar­an­tee to start a new job, how do you re­tain that per­son if you are not able to make a sim­i­lar of­fer?" the source said. "It is a poacher's char­ter."

This week the Com­mit­tee of Euro­pean Bank Su­per­vi­sors (CEBS) - which over­sees the bank­ing sec­tor in the 27 EU mem­ber states - will an­nounce a raft of new rules on re­mu­ner­a­tion set to re­strict up­front cash bonuses to 20pc of the to­tal award. The reg­u­la­tions are also ex­pected to say that 60pc of re­mu­ner­a­tion awards should be de­ferred and 20pc given in shares that can­not be im­me­di­ately sold.

Fol­low­ing the CEBS an­nounce­ment, the FSA will pub­lish its own guide­lines which will also in­clude sim­i­lar de­fer­ral rules and new reg­u­la­tions stip­u­lat­ing that the amount of money paid out in bonuses and salaries does not af­fect banks' cap­i­tal base. -PB News

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.