Ceiling set by Parliament for EU banker bonuses

The blight of worldwide economic crisis has prompted European Parliament to vote in favor of capping EU banker bonuses, 625-28. Excessive pension payouts will also fall under new guidelines. The Associated Press reports that any short-term cash bonuses from next year will be limited. It’s a move the European Union hopes the rest of the world will follow in kind.

Article resource: EU banker bonuses capped by European Parliament by Personal Money Store

EU bank rule will permit only partial bonuses in advance cash

Early withdrawal of EU banker bonuses will cap at 30 percent of the annual potential bonus. The remaining 70 percent could be held in reserve and paid to the banker if the business performs well. The idea behind this is to hold a sufficiently large carrot before EU bankers, where bonuses will inspire rather than simply be expected. As Michel Barnier of the EU Financial Services Commission told the AP, “There can be no return to business as usual”.

Huge EU banker bonuses could be limited to 20 percent for early withdrawal

Early withdrawal from large-scale bonuses can be limited to 20 percent. However, as the AP indicates, what constitutes a “large” bonus was not spelled out in detail by the European Parliament. All 27 European member countries will adopt the new cap on EU banker bonuses. Great Britain, France and Germany won’t seem much difference, as they’ve had banker bonus caps in effect for a while.

Banks could be required to have more money on hand

By 2012, European Union banks could be required to maintain a minimum level of capital so as to cover risky products like mortgage-backed securities. 3 to four times more capital could be required than normal, writes the AP. The worry on the part of the banks is that the open-endedness of this requirement may paint them into a corner and require that they hold onto so much that profits will plummet. Try convincing the public to cry for the banks and see what happens.

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USA Today

usatoday.com/money/world/2010-07-07-eu-bank-bonuses_N.htm