EU agrees to cap bankers' bonuses

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European Union officials have struck a provisional deal on new financial rules, including capping bank bonuses.

Under the agreement, bonuses will be capped at a year's salary, but can rise to two year's pay if there is explicit approval from shareholders.

The deal was reached late on Wednesday. EU ministers must approve it, although this is considered a formality.

The UK, which hosts Europe's biggest financial services centre, was opposed to any of caps on bank bonuses.

http://www.bbc.co.uk/news/business-21608938

[stevewinn]

this will greatly effect the UK more than any of the other members, clear thought is needed, its easy to bash the banker at the moment. but not all banks, in fact very few, needed bailout out money. and like any private company its up each company to decide on bonus pay. - recessions are part of the capitalistic system we live by, recessions are part and parcel of the system they come around in cycles. once this recession is over we'll have boom years followed by the inevitable bust, no matter what rules are in place. we can fool ourselves thinking we can prevent it but we cannot. a mixed economy is the key to limiting future impacts, but thats all we can do limit it.

The UK's financial services sector has established the UK as the world leader in generating net investment income from abroad. and seeing how we dont have mass manufacturing, Financial services play a vital role in British exports (services) and growth to the economy - according to the national statistics blue book 2012. financial sector accounts for 31% of our economy. are we going to throw the baby out with the bath water? No,

[Guest]

Top executives load remuneration committees with yes men who vote for excessive bonuses for those executives. There is effectively no oversight of this excess self rewarding. This goes on whether the executives earn the bank money or loss it money.

Bonuses should be a reward for performance - in banking they have become an unearned entitlement.

The banking industry cannot be trusted to regulate itself so the Government is compelled to step in.

Defending bankers bonuses at the moment is not justifiable.

Br Cornelius

[Ealdwita]

EU officials telling others to put a lid on the trough? Pot calling the kettle black springs to mind!

[A rather obscure Bassoon]

Not before time,the financial sector has proved time and time again that It cannot be trusted and will not regulate it's self.Why should Bankers be rewarded while the world financial chaos that they instigated plays out.

[stevewinn]

The EU has no right to tell a private company how much it can pay its employers in bonuses. and i think you'll find in the coming days the EU will be challenged on this issue and lose. its good PR for the EU but nothing more.

The United Kingdom is the financial centre in europe, its our largest sector for producing growth and export (services) for the economy - growth alone £67 Billion, employing 1.3 million people. the EU's constant attack on the City of London is to try and weaken us. - banks got us in this mess, but whose going to get us out of it? manufacturing, No, the Financial sector is what will save us, the irony i know, but its the cold hard truth. listen lets impose caps on pay/bonuses, and just watch the finest go to the other financial centres in the world. New York, Tokyo, Hong Kong. would you rather have them working in the UK, generating growth and taxes. or generating that growth and taxes in Tokyo etc...

Do not be fooled at the end of the day the EU will just continue to attack the City of London in a bid to damage our economy. attack the UK financial sector at our peril, where, are we going to generate £60+ billion revenue a year. were are we going to create 1.3 million jobs? like i said dont be fooled into thinking its only a bonus cap the EU consonantly tries to eat away at our Banking Sector from caps to transaction taxes. remember this the Financial sector will be the first to recover - followed by other economic sectors -manufacturing etc..

Edited February 28, 2013 by stevewinn

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The EU has no right to tell a private company how much it can pay its employers in bonuses. and i think you'll find in the coming days the EU will be challenged on this issue and lose. its good PR for the EU but nothing more.

Problem with that statement is that up until now banks had an all too important impact on the economy as a whole when things went wrong. It trickled down to entire society, and after all that they still didn't even begin to think about maybe skipping a bonus or even cutting it down. On the contrary, many bonusses even went up.

The EU has every right to send a signal so they can all check their morality.

Of course, with new regulations where it's expected banks will never be able to have such a disastrous effect again, they may be able to review this in a couple of years.

Punishment was due, it's just what it is.

Banks won't suddenly go elsewhere, that statement doesn't add up...companies always crack eventually. Government just has to stick to its guns and not let it blackmail itself into conceding because of this childish behavior. "if we can't take everybodies money and screw everyone over than we're just gonna leave mimimimi"

Bull.

[stevewinn]

Problem with that statement is that up until now banks had an all too important impact on the economy as a whole when things went wrong. It trickled down to entire society, and after all that they still didn't even begin to think about maybe skipping a bonus or even cutting it down. On the contrary, many bonusses even went up.

The EU has every right to send a signal so they can all check their morality.

Of course, with new regulations where it's expected banks will never be able to have such a disastrous effect again, they may be able to review this in a couple of years.

Punishment was due, it's just what it is.

Banks won't suddenly go elsewhere, that statement doesn't add up...companies always crack eventually. Government just has to stick to its guns and not let it blackmail itself into conceding because of this childish behavior. "if we can't take everybodies money and screw everyone over than we're just gonna leave mimimimi"

Bull.

EU wants to unlawfully cap bonus payments

February 28, 2013

Preliminary agreement has been reached between the European Parliament and the European Commission on the limiting of bonus payments in the financial service sector. The draft measure – which has yet to be ratified by the Council of Ministers – would seek to cap bonus payments at the level of an individual’s annual salary. Bonus payments could be subject to a cap of two years salary – but only with approval from shareholders.

Such an action would, however, be beyond the powers vested in the European Union under the EU Treaty. Article 153 (5) of the Treaty states that EU legislative powers shall “not apply to pay”. Furthermore, even if the Council’s powers were not challenged in this matter financial institutions would remain free to increase base salaries to reward and retain key staff.

http://www.fedee.com/eu-wants-to-unlawfully-cap-bonus-payments/

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Well, let's just wait and see if it gets pushed through.

[Guest]

Steve you are wrong - the Government can pass any regulation it cares to pass and there is nothing vindictive about it. The current structure of the financial industry rewards risky and socially damaging behaviour and that is a social matter not a personal economic matter.

The UK has been one of the prime culprits in years of financial corruption which has crashed the world economy - this came about due to the crony relationship between Westminster and the square mile. It really is time for Governments to prevent dangerous behaviour and consider the best interests of the country rather than a crony elite who have corrupted the social process.

This represents the first step in what will become a crack down on financial industry.

Br Cornelius

Edited February 28, 2013 by Guest

[Yamato]

The bailouts go right to the people closest to the government; the banks. This story is akin to a parent reducing a child's allowance, when the child doesn't even belong to the parent (the government is not beholden to the banks).

I fired my bank long ago and I couldn't be happier about my decision. Once again, the free market provided the best solution to all this monkey business. If we accept this banking parentage on its face, then we might want the industry to be cracked down upon too as a consequence. Feeding the mouth with one hand and choking the neck with the other? Nonsense. Take both hands off and go find something good to do with them.

[stevewinn]

Steve you are wrong - the Government can pass any regulation it cares to pass and there is nothing vindictive about it. The current structure of the financial industry rewards risky and socially damaging behaviour and that is a social matter not a personal economic matter.

The UK has been one of the prime culprits in years of financial corruption which has crashed the world economy - this came about due to the crony relationship between Westminster and the square mile. It really is time for Governments to prevent dangerous behaviour and consider the best interests of the country rather than a crony elite who have corrupted the social process.

This represents the first step in what will become a crack down on financial industry.

Br Cornelius

why am i wrong? - anyway, ask the question why do banks exist? their job by their nature is to invest and with that take risk. and that will continue. what banks have been told to do is to separate the two parts of their business retail - investment to limit exposure. -

what the EU is trying to do is not workable. and will make us less competitive globally if all the major trading centres in the world applied the same across the board then it might work, but not as its stands' it will be like the UK continuing with one hand tied behind its back. its bordering on economic war, what the EU are continuing to do, they know the UK is likely to leave the EU. and their trying to weaken our economy so we need the EU more than ever, once we lose our title as financial powerhouse theres not much else left.

EU banker bonus cap 'self-defeating'

The EU's proposed cap on banker bonuses will drive business away from London, Boris Johnson, the mayor of Europe's biggest financial centre, has said. He said the move was "self-defeating" and would at best provide "a boost for Zurich and Singapore and New York at the expense of a struggling EU.

The UK, which hosts Europe's biggest financial services centre, was opposed to any caps on bank bonuses and had been trying to rally other governments in the 27 countries in the EU behind its opposition to the bonus cap.

[Guest]

It will transfer renumeration to regular pay which will mean that the bank will have to employ the right person for the job rather than the banker which takes the most risks and produces short term benefits. The balance of investment will move towards rewarding longer term investment strategies.

Br Cornelius

[stevewinn]

It will transfer renumeration to regular pay which will mean that the bank will have to employ the right person for the job rather than the banker which takes the most risks and produces short term benefits. The balance of investment will move towards rewarding longer term investment strategies.

Br Cornelius

banking is all about investing money. taking risk and maximising profit as much as possible as soon as possible. the banking system cannot be that flawed. how many years as it been since the last global recession? 80+ years? and this crisis compared to the last one is not even comparable. - its only the socialists who want to limit endeavour. socialism is the equal sharing of misery.

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan".. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a Grade D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that. (Please pass this on) These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation

[Guest]

Steve, I am not advocating socialism here. What I am pointing out is that the unregulated banking system loaded the world with fictitious money (derivatives) which was many times the net GDP of the entire globe and was essentially worthless. it devalued the currencies of the world to boot. This was in pursuit of short term risky gains which were purely based on money making money. They undermined the real productive capacity of the world economy and have left us in what will become a financial downward spiral of hyperinflation.

I personally think the fact that they rewarded themselves so richly - whilst destroying the real productive capacity of the world was criminal and they should all have been locked up on mass. instead they have carried on giving themselves bonus whilst they continue to hemorrhage money on a daily basis - costing the British public dearly every day. The incentives in the economy are all wrong - and for you, who works in a real productive sector of the economy to defend them seems naive at best. To then attempt to call it socialist to attempt to rebalance the economy away from speculative funny money generating nothing but inflation - towards rewarding real productive effort is frankly delusional.

The bankers got us into this crisis - they are still digging us deeper down into it - it will not be the bankers who will suddenly realize the error of their ways whilst we continue to reward them for indulging in risk taking rather than in solid industrial productivity.

Again I direct your eyes to the model of Germany where they have used regional development banks to develop real sustainable long term profit and productive capacity. Contrast that to the UK where industry has suffered the death of a thousand cuts at the hands of a Government and banking sector that cannot look further than the next fractional trading profit.

Confusing bankers with people who actually do productive work and blaming the people of the UK for been the victims of an economy which has disinvested in industry for decades is defending the criminals for their crimes.

Br Cornelius

Edited March 3, 2013 by Guest

[A rather obscure Bassoon]

Money has become numbers on a Computer,an illusion in the modern world.Everytime we use our Debit cards we move numbers from one computer to another,it's all too easy for the Banking system to gamble with Money that doesn't exist.

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UK faces bankers' bonus battle in EU

http://www.bbc.co.uk/news/business-21661089