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.Contact Us