Banks to face bonus curbs
BANKS with low levels of capital should face a limit on bonus payouts, according to an international body of regulators and central bankers.
The Financial Stability Board (FSB) yesterday agreed to submit the proposal to G20 leaders next week, ahead of their summit in Pittsburgh.
“We will have a link between a bank’s total bonus pool and the firm’s overall performance,” FSB Chairman Mario Draghi said yesterday. “It’s important that firms conserve profits so they can rebuild capital and support lending.”
Draghi, who is governor of the Bank of Italy and a former Goldman Sachs managing director, said the new capital requirements would be phased in progressively.
Governments are hoping to agree global standards on financial institutions’ compensation levels at the G20 summit, in a bid to focus workers on long-term gains rather than short-term profits.
While France has pushed for an outright cap on bonuses, the UK has rejected them as “unworkable”.
Draghi said guidelines would include recommendations on pay disclosure, vesting periods for options and the possibility of “claw-back” schemes where bonuses would have to be repaid if deals unravel.