Austria, whose banks’ combined bonus pool is a sixth the size of the figure for Germany’s Deutsche Bank AG, is putting restrictions on bonuses exceeding 30,000 euros ($40,000) from this year.
Bonuses paid to “risk buyers” such as traders or loan officers that are above this level or equivalent to more than a quarter of the annual fixed salary must be deferred over a five-year period, the co-head of the Finanzmarktaufsicht regulator, Helmut Ettl, told journalists in Vienna today. If the bank’s economic situation worsens during the five-year period, payments have to be skipped, Ettl said. The rules apply for the first time for bonuses paid this year for fiscal 2012.
“The goal is to design a policy that creates incentives bringing employees’ interest in line with the long-term interest of the companies,” Ettl said. While “Austria can’t compare with the U.K.,” there “are business areas where we still have to make sure the right incentives are given,” he said.
Austrian banks, focusing on retail banking at home and in eastern Europe, have already used modest average compensation structures. Only 14 employees working for the country’s banks at home and abroad were paid more than 1 million euros in total compensation in 2011, according to an FMA survey of 26 lenders Ettl presented. The banks surveyed had 2,282 employees.
Overall, banks paid 590 million euros in bonuses in 2011. Deutsche Bank, based in Frankfurt, said it paid 3.6 billion euros.
The FMA is largely implementing European Union regulations, while defining the national threshold, Ettl said.
Under the new rules, just 60 percent of bonuses can be paid out immediately, with the remaining 40 percent being phased over five years. For bonuses exceeding 150,000 euros, or 100 percent of fixed salaries, only 40 percent can be paid at once.
Erste Group Bank AG, Raiffeisen Bank International AG and UniCredit SpA’s Bank Austria are the country’s three biggest lenders. The bonus rules also apply to their subsidiaries in eastern Europe and elsewhere, Ettl said.
Raiffeisen may have difficulties retaining staff in Moscow because of the new rules, Chairman Walter Rothensteiner told journalists last month. Russian banks, which are not subject to EU rules, are already approaching Raiffeisen bankers with the prospect of unlimited bonuses, he said.
“It’s a catastrophe for the competition in non-EU countries,” Rothensteiner said, adding that banks outside the EU have already lured away Raiffeisen staff. “They are laughing at us, and some of them offer three times the salary.”