Spain’s government passed a decree to cap board members’ pay at banks seized by the state at 50,000 euros ($66,000) and said chief executives of lenders receiving any state aid can’t earn more than 600,000 euros.
Board members at seized banks will also be barred from bonuses, and the chief executives of those lenders will have their pay capped at 300,000 euros, Economy Minister Luis de Guindos said today after the Cabinet meeting in Madrid.
Annual pay for chief executives and chairmen of lenders in which the state owns preference shares will be capped at 600,000 euros, with bonuses suspended. Board members’ pay at those lenders will be limited to 100,000 euros.
The rules, passed by the six week-old People’s Party government, are part of a decree that forces banks to recognize losses on real-estate assets while offering public support for lenders that merge. The government is trying to bolster banks and restore the flow of credit to the shrinking economy without alienating voters suffering from a 23 percent unemployment rate and the deepest austerity measures in at least three decades.
The pay limits in Spain, which has spent about 15 billion euros bailing out lenders, contrast with remuneration in the U.K., where the government injected 45.5 billion euros into Royal Bank of Scotland Plc. Chief Executive Officer Stephen Hester waived his 963,000-pound ($1.26 million) bonus after the opposition Labour Party said it would ask Parliament to vote on the award.
Spanish banks that have received support from the government in the form of preference shares include BFA, the parent company of Madrid-listed Bankia SA. Rodrigo Rato, the former head of the International Monetary Fund, heads the BFA group and the listed lender.