"Bloomberg reports that Sharon Bowles, chairwoman of the EU's Economic and Monetary Affairs Committee, said Tuesday that banker bonuses should be capped at 50% of their salary, and the proposals to limit bonuses will face an EU Parliament vote in July.
One banker told Here Is The City: 'It just shows how far these lawmaking types are from understanding the real causes of the financial crisis and how their ill-thought-out ideas will work in practice. I think everyone understands the need to align compensation with long term performance, but limiting bonuses to a percentage of base pay will only see salaries increase again - and in some cases they will go up substantially. This is a classic case of the Law of Unintended Consequences - bankers will receive so much of their compensation in fixed pay, that they will have no incentive to perform and no incentive to limit their risk-taking either, as their own downside will be protected'.
And Ms Bowles' reaction to complaints from bankers about the bonus restriction suggestions ? - 'If bankers and traders want to leave and go to other jurisdictions.....I say good riddance'. But Ms Bowles, they won't be shipping out - they will be forming a queue to get in to the EU zone. 'Frankly', another senior trader told us, 'I like this idea. We all know that huge bonuses are a thing of the past (at least for a while), so the thought of a base salary of a few million is really quite appealing. You have to love those daft brushes over at the EU!'. "
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