EU curbs on bankers' bonuses bite next year - 2010-07-07

The EU is moving with unprecedented speed to curb bankers' bonuses, putting robust new laws in place before next year's bonus announcements.

Labour Euro-MP Arlene McCarthy today won the European Parliament's support for measures forcing banks to hold more capital to set against risky activities.

Key provisions will include a cap on the ratio of bonus to fixed salary. Bonus-style pensions will be covered as well, preventing those responsible for a bank's collapse from walking away with huge pension pots.

Arlene McCarthy told the Parliament in Strasbourg: "Financial experts agree that a high-risk, short-term bonus culture, combined with a lack of capital, were at the heart of the global financial crisis in 2008.

"Governments and taxpayers bailed out the banks with 3.9 trillion euros of support. In the UK alone, the support was 1.2 trillion pounds - almost as much as a whole year's GDP.

"Remuneration policies must first and foremost prioritise the health and stability of a financial institution. Despite claims by the banks that they have learned lessons, they have actually increased salaries and bonuses as a proportion of revenues.

"When governments are cutting budgets and people suffer reduced services and support, we cannot accept a banking culture that puts pay and perks above sustaining capital and credit for Europe's economic recovery.

"The bankers have failed to take appropriate action, so we are doing the job for them to rebuild trust and confidence in our banking system."

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