BANK BONUS LIMIT AGREED BY EUROPEAN PARLIAMENT
Baku, July 7 (AZERTAC). The European Parliament has approved a deal placing new limits on bankers` bonuses from next year, BBC reports.
Under the deal agreed by the EU members in June, bankers will receive no more than 30% of their bonus immediately and in cash, a limit that falls to 20% for larger bonuses.
Remaining payments will be deferred and linked to long-term performance.
Hedge funds will also be covered by the new rules. But there will be no cap on what bankers can be paid.
In the wake of the bailout of banks across Europe, MEPs have taken aim at the huge bonuses paid to top performers, the BBC`s Dominic Hughes in Strasbourg reports.
Some blamed the bonus culture for encouraging risky behaviour which in turn led to the financial crisis, our correspondent adds.
Under the new scheme, 40% of a bonus must be deferred for between three and five years.
Half of the total bonus will be paid in the form of what is called "contingent capital". This is a kind of IOU from the bank that can then be turned into shares if it runs into trouble, our correspondent says.
As a result, bankers` bonuses become much more closely tied to the health and actual performance of banks, he adds.
The new rules have been agreed by EU member states and the European Parliament, though MEPs now need to hold a formal vote.
The agreement includes proposals to link bonuses more closely to salaries and the long-term performance of the bank.
Large severance packages for departing executives will also be limited.
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