EU: Banks could be fined for bonuses!!
By Daniel at 13 July, 2009, 9:25 am
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European financial supervisors would be able to fine banks that give bonuses encouraging staff to take excessive risks under new rules proposed by the European Commission on Monday.
The EU executive also suggested new capital requirements for how much banks should set aside to cover high-risk investments, including their trading book and resecuritizations that combine, slice up and repackage investments based on loans.
The new rules are not likely to enter into force until late 2011 and will need the backing of the European Parliament and the EU’s 27 governments.
The EU said this would be too late to address the current financial crisis but the proposals could strengthen market confidence and banks’ financial health.
The EU’s top financial services official Charlie McCreevy said the EU was trying “to put an end to the culture of excessive risk-taking for short-term success at the expense of long-term profitability and sound risk management.”
Regulators want payoffs for staff quitting banks early to reflect performance over time, saying they “should be designed in a way that does not reward failure.”
National supervisors would monitor banks’ policies on severance pay and “may impose sanctions such as fines” in extreme cases where banking pay encourages risky behavior, they said. Fines would be set by each EU country and could vary widely.
http://www.cnbc.com/id/31888891
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