Friday

5th Mar 2021

MEP calls for end to massive bank bonuses

  • MEPs want to limit bankers' bonuses to their fixed salaries. (Photo: Matt Buck)

Austrian centre-right MEP Othmar Karas has called for an end to massive bankers' bonuses, which in some cases amount to 10 times the basic salary.

"We are looking at a set limit," Karas told the parliament's economic affairs committee in Brussels on Thursday (12 April). He explained that under his model, bonuses should not surpass a ratio of one-to-one on fixed salaries.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The highest paid banker in Europe in 2011, according to Financial News Online, is Mike Rees, who is the head of wholesale banking at Standard Chartered.

Company accounts show that Rees has a base salary of €836,000 but received a €3 million bonus, a deferred share award of €4.5 million and a ‘performance share’ allocation worth some €1.67 million. In total, Rees earned over €10 million in 2011.

The head of global banking and markets at HSBC took in €9.34 million. His base salary is €787,000.

Karas' proposals are potentially to be introduced into the capital requirements directive, adopted in 2006 and currently under its fourth review by the European Commission.

World leaders in response to the 2008 banking crisis already agreed in 2010 to tougher bank rules - known as Basel III. Basel III aim to tighten banks' capital and liquidity rations from 2016 and includes measures on salaries.

But a global agreement on how to regulate bankers' bonuses still remains elusive, raising the threat that if the EU gets too tough, companies will relocate.

A survey released on Thursday by the London-based European Banking Authority also noted that some bankers receive bonuses 10 times higher than their fixed salaries.

The report noted that most member states leave it up to the institutions to impose a set internal maximum ratio. The highest reported rations were 429 percent for executives and 904 percent for "other identified staff."

The report concludes that in all member states "the variable part of the remuneration exceeds the fixed remuneration considerably for all identified staff."

In a note which sheds light on the risky trading which led to the 2008 crash, it added that these variables increase proportionally to the amount of risk taken by the staff. The higher the risks taken, the greater the bonuses. The report warns that such remuneration tactics could "incentivise staff to take too much risk in order to assure a certain minimum pay level."

Brussels seeks financial tax in new EU budget

Future EU spending is set to increase, focusing marginally less on agriculture and more on research, education and transport, according to European Commission proposals for the next seven-year budgetary period (2014-2020). Brussels also wants a financial transaction tax to help fill EU coffers.

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  2. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  3. CESIKlaus Heeger and Romain Wolff re-elected Secretary General and President of independent trade unions in Europe (CESI)
  4. Nordic Council of MinistersWomen benefit in the digitalised labour market
  5. Nordic Council of MinistersReport: The prevalence of men who use internet forums characterised by misogyny
  6. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!

Latest News

  1. China and Russia abusing corona for geopolitics, Lithuania says
  2. Worries on Europe's infection surge, after six-week drop
  3. EU wants large firms to report on gender pay-gap or face fines
  4. EU Commission cannot hold Frontex to account
  5. Orbán leaves EPP group - the beginning of a long endgame
  6. 'Corporate due diligence'? - a reality check before EP votes
  7. Austrian ex-minister joins list of EU's pro-Kremlin lobbyists
  8. Internal Frontex probe to deliver final report this week

Join EUobserver

Support quality EU news

Join us