Dutch Finance Minister Jeroen Dijsselbloem said bankers’ bonuses should be limited to a fifth of wages, with those working outside the country exempted.
The proposal, made in a letter to the Dutch parliament today, also allows banks to claw back payments should workers violate standards or cause big losses. The rules will apply to the entire Dutch finance industry, including insurance companies, Dijsselbloem said.
Dijsselbloem’s caps are more stringent than European Union proposals outlawing bonuses of more than twice fixed pay starting next year. The continent’s politicians are bidding to prevent excessive payouts and curb irresponsible risk taking. While European banks try to limit the number of workers that the restrictions apply to, the Dutch plan covers all employees.
The proposal will make it more difficult for ING Groep NV (INGA), the biggest Dutch financial services company, to compete internationally, the company said in an e-mailed statement today. The Netherlands already limits variable compensation more than other countries, it said.
Public anger toward bankers flared last month when Rabobank Groep, the country’s second-biggest lender, was fined 774 million euros ($1.05 billion) for rigging interbank lending rates. In February, the government nationalized SNS Reaal NV at a cost of 3.7 billion euros.
Dijsselbloem will allow exceptions to the pay limits for people working outside the Netherlands, in line with European proposals, he said in the letter. Dutch banks including ING have warned excessively strict compensation caps may harm their ability to attract and retain staff.
The European Banking Authority, which coordinates the work of regulators in the 28-nation bloc, is deciding which employees will be covered by the curbs the EU said would apply to risk-takers. HSBC Holdings Plc (HSBA), Europe’s largest lender, said in August it may raise salaries to combat the proposed EU rules. Barclays Plc may also boost fixed pay for some employees, a person with knowledge of the plans said Nov. 23.
Dijsselbloem’s proposals also limits bankers’ bonuses on departure to an amount equal to fixed annual salaries.
Dutch banks curbed bonuses for top executives to an amount equal to annual pay in 2010, and the nation introduced a ban on variable compensation for institutions receiving state aid. ING, the biggest financial-services company, hasn’t awarded its board members bonuses in the last five years and fixed compensation has remained unchanged since 2010.
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