Bankers sidestepping bonus cap face regulator action: EU's Barnier

Tue Mar 18, 2014 2:40pm EDT
 
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By Huw Jones

LONDON (Reuters) - Bankers who sidestep a cap on their bonuses will face action from the European Union's banking regulator, the bloc's financial services chief said on Tuesday as he fought off calls to toughen up the measure.

The cap is one of the most high-profile rules approved by the 28-country bloc following public anger over high pay at banks, many of which were propped up by taxpayers in the 2007-09 financial crisis.

The rule, already the toughest curb on bonuses globally, limits them to no more than an employee's fixed salary, or twice that level if approved by the bank's shareholders, and will affect 2014 awards to be handed out early next year.

Some members of the European Parliament accuse banks of skirting the cap by awarding monthly or quarterly "allowances" to boost a banker's fixed pay.

EU financial services commissioner Michel Barnier said the allowances, which he described as a "new category of invented revenue", were being examined by the European Banking Authority (EBA), an EU watchdog.

Britain's HSBC has said it will give new "allowances" - expected to take the form of monthly or quarterly payments in cash or shares - to senior staff to boost their fixed pay, meaning that higher bonuses could then be awarded.

UK peers Lloyds and Barclays have indicated they will follow suit.

"If we note any deviations or sidestepping of the law then ... the EBA needs to assume its responsibility and react," Barnier told the European Parliament's economic affairs committee.   Continued...

 
European Commissioner for Internal Market and Services Michel Barnier holds a news conference on the restructuring of the bank at the European Commission headquarters in Brussels January 29, 2014. REUTERS/Laurent Dubrule