EU’s Bowles Says Bonus Rule Deal Needs to Include Binding Limit
The European Parliament and member governments may reach a compromise on bonus curbs for bankers that limit how far pay awards can exceed fixed salaries, lawmaker Sharon Bowles said.
Bowles, who heads the assembly’s Economic and Monetary Affairs Committee, said a compromise deal would need to set a “multiple” of how many times a bonus can exceed fixed pay.
“At the moment I think the feeling is very strong” in the parliament in favor of setting a maximum ratio, Bowles, who has applied to replace Mervyn King as governor of the Bank of England, said today in an interview on Bloomberg Television’s “The Pulse” with Guy Johnson.
Bankers are facing a backlash from European lawmakers determined to cut variable pay as part of a quest to reshape lenders as utilities rather than money-making machines. The regulatory push comes as public outrage and shareholder rebellions this year forced some banks, including Citigroup Inc. (C) and Barclays Plc (BARC), to retreat from their initial pay plans.
As part of this push, lawmakers in May put a ban on bonuses that exceed fixed salaries into their negotiating position on a draft bank capital law.
The move has been opposed by lenders and some governments, which have argued that it might harm the bloc’s competitiveness.
Parliament has asked governments “to come back with a proposal that is a fixed ratio,” Bowles said. “I think the middle ground is a multiple.”
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