EU banker bonuses capped by European Parliament

The global economic crisis was caused in no small part by the shenanigans of the banking and investment industries, so the European Parliament has voted 625-28 in favor of EU banker bonuses being capped as soon as possible. In addition, extensive pension payouts were affected by the Parliament decision. Any form of short-term cash bonuses of this nature will fall under Parliamentary sway. Now it is time for the rest of the world to follow suit.

Article source: EU banker bonuses capped by European Parliament by Personal Money Store

Bonus advances could be closely monitored by EU

Early withdrawal of EU banker bonuses will cap at 30 percent of the annual potential bonus. The remaining 70 percent can be held in reserve and paid to the banker if the company performs well. This may create enough incentive to lead European bankers from the path of short-term personal gain instead of long-term customer satisfaction. As Michel Barnier of the EU Financial Services Commission told the AP, “There will be no return to business as usual”.

Twenty percent cap on huge early withdrawal

Banks where executives receive extra-large bonuses should expect to be able to take a maximum of 20 percent early. European Parliament has neglected to numerate what constitutes a “large” bonus so far. The entirety of the European Union – comprised of 27 member countries – will be bound by the ruling on EU banker bonuses. Great Britain, France and Germany won’t seem much difference, as they’ve had banker bonus caps in effect for a while.

Banks can be required to have more money on hand

As part of the new rule, European banks beginning in 2012 could have to keep at least a minimum level of operating capital on hand to cover risky ventures like mortgage-backed securities. The Associated Press speculates that European banks would have to hold three to four times the standard level of capital in order to cover such risks. The worry on the part of the banks is the open-endedness of this requirement may paint them into a corner and require that they hold onto so much that profits will plummet. Try convincing the public to cry for the banks and see what happens.

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USA Today

usatoday.com/money/world/2010-07-07-eu-bank-bonuses_N.htm