Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Bonuses Paid in Subordinated Debt Should Be Mandatory, EBA Says

Don't Miss Out —
Follow us on:

Dec. 14 (Bloomberg) -- Senior bankers should be required to receive some of their annual bonus in bonds that would suffer losses during a financial crisis, Europe’s top banking regulator said.

A “mandatory share” of bonuses for top management should be paid in so-called bail-in bonds, which can be written down when the lender’s capital dips below a safe level, the European Banking Authority said in an opinion on proposals to separate banks’ commercial and investment units.

“Such measures could be adopted in a swift manner and may efficiently contribute to the overall efforts to reduce moral hazard and restore confidence between the public and the banking system,” the EBA said.

Michel Barnier, the European Union’s financial services chief, has said that he’s weighing proposals made by an advisory group led by European Central Bank Governing Council member Erkki Liikanen. The measures, which would force lenders to set up legally separate trading entities, are a “good basis” for future EU policy making, Barnier has said.

The EBA said the commission should consider how splitting up banks would affect their cost of funding, so as not to create “unintended adverse consequences.”

To contact the reporter on this story: Ben Moshinsky in Brussels at bmoshinsky@bloomberg.net

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.