Italy, Spain, Greece and four other European Union nations have failed to implement rules on bank bonuses aimed at curbing excessive risk taking and preventing staff from being rewarded for poor results.
Poland, Portugal, Slovenia and Slovakia have also missed a Jan. 1 deadline to adopt the remuneration limits, the European Commission said in a statement on its website. The commission gave the countries two months to comply.
“If common rules are not upheld at the same level across the EU, this would leave room for current loopholes to be exploited,” the commission, the 27-nation EU’s executive arm, said today.
The EU law, approved last year, restricts cash payments of bank bonuses and forces lenders to disclosure the number of people earning more than 1 million euros ($1.4 million). Michel Barnier, the EU’s financial services commissioner, has said further action may be needed in the region to prevent payouts at “unjustifiable levels,” claiming that lenders had failed to heed calls for moderation in this year’s bonus round.
Under the EU rules, as much as 60 percent of a bonus payout for risk-takers and senior managers must be deferred for at least three years, and half of the remaining amount must be in the form of shares.
Ten nations have also failed to “fully” put in place measures in the same law to increase the capital reserves that lenders must hold against potential losses.
Italy, Spain, Greece, Poland, Portugal, Slovenia, Belgium, Luxembourg, Sweden and Slovakia may face legal action unless they fully apply the capital rules, the commission said.
“If the national authorities do not notify the necessary implementing measures” on the bonus and capital rules “within two months, the commission may refer the member states concerned to the Court of Justice,” it said today.
Spain has already implemented “practically all” of the EU measures and will implement the remaining aspects “imminently,” the nation’s finance ministry said in an e mailed statement.
Italy’s finance ministry didn’t immediately respond to an e-mail and two phone calls seeking comment.
Sweden plans to comply with the rules by June 30, Victoria Ericsson, a spokeswoman for the Swedish financial ministry, said in a telephone interview.
“In the wake of the financial crisis, there’s been a need for comprehensive regulatory work both on a global and EU level and these things take a bit of time to implement,” Ericsson said.
The Slovak finance ministry has prepared a draft law that will be discussed by the country’s government and then submitted for approval by lawmakers, Martin Jaros, a spokesman for the ministry said in a phone interview.
Greece intends to comply with the rules, a finance ministry press officer, who wouldn’t be named in line with official policy, said by phone from Athens.
Legislation incorporating the EU rules into Slovenian law is scheduled to be adopted by the end of June, the finance ministry in Ljubljana said in an e-mail.
Poland’s finance ministry said the country is working on a law to partially implement the EU rules. The January deadline originally set by the EU didn’t give Poland enough time to enact the rules, the ministry said in an e-mail.
Spokespeople at the Portuguese and Belgian finance ministries couldn’t be immediately reached. The Luxembourg government declined to comment.