Banks are looking to clarify new rules on bonus with Brussels amid mounting concerns that the legislation could lead to more requirements for financial institutions, reports the Financial Times.
Under the new EU legislation, the rules on bonuses must be applied across the industry without the possibility of exemptions to individual countries. Smaller banks, brokerages and investment firms might be in for some new requirements too, while major financial institutions will be forced to extend the scope of their rules to cover staff that was once exempted, such as asset management divisions.
Banks warn that a high level of regulatory oversight may hinder their ability to structure compensation packages that can attract and retain top bankers—especially for smaller banks who are looking to hire experts outside the EU.
According to the Financial Times, in a letter sent to Vera Jourova, European commissioner responsible for regulating executive pay Frédéric Oudéa, chief executive of Société Générale and the European Banking Federation president said that removing exemptions would only lead to higher costs for implementation and additional administrative commitments without any benefits.
The most recent EU banker pay rules place a cap on bonuses that are more than twice of a banker’s annual fixed pay. At the center of the controversy, however are issues such as deferral of payouts, and the requirement for parts of the bonuses to be paid out in shares or in similar methods.
By the end of this year, the European Banking Authority is expected to unveil guidelines on how the new pay rules should be implemented.