Brussels puts a lid on it....
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Bad news today from Brussels for bankers hoping for a nice fat bonus next year... The European Parliament backed plans to cap compensation for bankers as a part of a deal that aims to curb the so-called bonus culture and bring financial institutions under stricter supervision.
The new rules, which had already been approved by member states, could come into force at the start of next year.
The limits on bonuses are part of an effort to curb the culture of reckless risktaking in the banking sector that is seen as largely responsible for the recent financial crisis.
Under the proposal, bankers will only be able to recieve a maximum of 30% of their bonuses upfront in cash. The rest will be closely linked to the bank's long term performance.
EU Financial Services Commissioner Michel Barnier talked up the move as Europe blazing a trail for global financial security. "The EU is leading the way in curbing unsound remuneration practices in banks," he said.
But some analysts are worried that it could backfire and actually damage the continent's banking sector. They argue that if the rest of the world does not follow suit, then Europe's best bankers will simply jump ship and follow the big bucks abroad.
