EU Lawmakers Threaten to Reject Basel Law Deal Without Bonus Cap
European Union lawmakers are threatening to reject any deal on a bank capital law without a cap on banker bonuses that exceed fixed pay, days before a scheduled meeting with EU officials.
The Parliament has rejected proposals from governments that would have allowed awards of as much as five times a banker’s basic salary, Sharon Bowles, chairwoman of the European Parliament’s economic and monetary affairs committee, said in an e-mail. The lawmakers are “taking a firm line” on the ban as part of negotiations on the Capital Requirements Directive, Bowles said.
“There won’t be any agreement on CRD as a whole, if there’s no agreement on the bonus cap,” Othmar Karas, the lawmaker leading the parliament’s work on the draft law, said in a statement.
The bonus debate has hampered the EU’s efforts to agree on the bank capital law, which would implement on overhaul of the international rulebook for lenders drawn up by the Basel Committee on Banking Supervision. Legislators are scheduled to meet with officials from Cyprus, which holds the EU’s rotating presidency, tomorrow and on Dec. 13 in a last-ditch attempt to reach a deal by the end of the year.
Bankers are facing a backlash from EU lawmakers determined to cut variable pay as part of a quest to reshape lenders as utilities rather than money-making machines. Public outrage and shareholder rebellions have already led some banks to limit payouts.
Citigroup Inc. (C) shareholders rejected that bank’s executive pay plan earlier this year. Barclays Plc (BARC) former Chief Executive Officer Robert Diamond, prior to his resignation over the Libor interest-rate scandal, also was pressured by investors into forgoing part of his total compensation.
The measures, known as Basel III, more than triple the core capital that lenders must hold compared with the last round of international rules.
The European Commission, the 27-nation EU’s executive arm, admitted earlier this month that the bloc would join the U.S. in failing to meet a Jan. 1, 2013, deadline to begin phasing in the new Basel rules.
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