Bankers bonuses capped, but that’s not the worst of it…

The EU Parliament today published a press release confirming a cap on bankers’ bonuses.  If approved, the ratio of basic salary to bonus of bank employees will be capped at 1:1, effective from 1 January 2014.  If approval is given by at least 65% of shareholders owning half the shares represented in a vote (or 75% of votes if there is no quorum), the ratio can be increased to 1:2.  However, if the ratio is increased above 1:1, then a quarter of any bonus paid must be deferred for at least five years.

Of equal concern to banks will be the paragraph which almost constituted a footnote to the Parliament’s press release.  This will require banks to disclose profits made, taxes paid, subsidies received, turnover and number of employees on a country-by-country basis.  This is likely to result in a significant change of process and administrative burden for a large number of banks, not to mention a degree of transparency many would prefer to avoid.  From 2014 this information will have to be reported to the EU Commission.  From 2015 it will have to be made public.