EU banker bonuses held in check by Parliament

The European Parliament has voted 625-28 in support of capping EU banker bonuses, a sign that economic crisis is still firmly in mind. Excessive pension payouts will even fall under new guidelines. The Associated Press reports that any short-term cash bonuses from next year could be limited. Now it is time for the rest of the world to follow suit.

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

Bonus advances will be closely monitored by EU

From 2011 onward, EU banker bonuses will be limited to up to 30 percent of the annual bonus via advance cash loan. The 70-percent remainder could be held back and distributed only if the company performs at a high level for the year. The operative notion is that withholding the majority of the bonus will prod EU banker bonuses depending on performance, instead of a gentrified system. Michel Barnier, the EU financial services commissioner, told the AP that “There will be no return to business as usual”.

Huge EU banker bonuses can be limited to 20 percent for early withdrawal

Early withdrawal from large-scale bonuses will be limited to 20 percent. What constitutes a “large” bonus was not specified by Parliament, though. The entirety of the European Union – comprised of 27 member countries – will be bound by the ruling on EU banker bonuses. For nations like Great Britain, France and Germany, however, the rules will not seem out of place – they’ve had banker bonus caps for some time.

Banks could be required to have more money on hand

European Union banking establishments will also be required to maintain a enough level of capital on hand to insure against risky investment products. According to the AP, the specific capital level for European banks would be approximately 3 to four times the previous (pre-recession) level. The banks will comply, but you will find grumblings that the new rules may require even more of them, which will in turn eat into profits. 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