The blight of worldwide economic crisis has prompted European Parliament to vote in favor of capping EU banker bonuses, 625-28. Excessive pension payouts will also fall under new guidelines. Any form of short-term cash bonuses of this nature will fall under Parliamentary sway. Now it is time for the rest of the world to follow suit.
Resource for this article: EU banker bonuses capped by European Parliament by Personal Money Store
EU banking decision will put hold on advance cash bonus dollars
Early withdrawal of EU banker bonuses will cap at 30 percent of the annual potential bonus. The 70-percent remainder can be held back and distributed only if the business performs at a high level for the year. This may create sufficient incentive to lead European bankers away from the path of short-term personal gain rather than long-term customer satisfaction. Michel Barnier, the EU financial services commissioner, told the AP that “There can be no return to business as usual”.
Giant early withdrawals will be capped at 20 percent
Banks where executives receive extra-large bonuses should expect to be able to take a maximum of 20 percent early. European Parliament has neglected to numerate what constitutes a “large” bonus so far. The new cap on cash loan bonuses for European bankers effectively creates rules for all 27 member countries of the European Union for how to deal with EU banker bonuses. Great Britain, France and Germany won’t seem much difference, as they’ve had banker bonus caps in effect for a while.
Banks can be required to have more money on hand
By 2012, European Union banks could be required to maintain a minimum level of capital so as to cover risky products like mortgage-backed securities. According to the AP, the specific capital level for European banks would be approximately 3 to four times the previous (pre-recession) level. The banks will comply, but you will find grumblings that the new rules may require even more of them, which will in turn eat into profits. The ultimate equalizer – the prospect of an additional financial meltdown – is simply too horrifying to contemplate.
Discover more information here:
USA Today
usatoday.com/money/world/2010-07-07-eu-bank-bonuses_N.htm
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