Bankers' bonuses to be capped as part of compromise with member states.
The European Parliament's plenary in Strasbourg today (16
April) endorsed tougher rules on the capital that European Union banks must
hold as a buffer against financial shocks. The compromise deal also caps
bankers' bonuses at a level equal to their basic salary, or at double that if a
certain number of shareholders agree.
The compromise deal on prudential banking rules (CRD IV) was
struck in three-way negotiations between Ireland, representing the member
states, the European Commission and MEPs in March. Its endorsement by the
plenary was seen as a formality, and the legislation garnered an overwhelming
majority in favour. The backing of the Council of Ministers is now required for
the legislation to apply from 1 January 2014.
Othmar Karas, a centre-right Austrian MEP who drafted
Parliament's position on the new legislation, described the new rules as “the
foundation on which the EU banking union must be built”, with a single banking supervisory
mechanism as the roof.
The new rules obliged banks to set aside at least 8% of
low-risk and liquid capital so they can pay out depositors or creditors in a
Banks will also be required to declare to the European
Commission their profits, any subsidies received and any taxes paid.
The supervisory powers of the European Banking Authority
(EBA) will be expanded to ensure compliance with the new rules.
Michel Barnier, the European commissioner for internal market and services, said: "The new framework will make EU banks more solid and will strengthen their capacity to manage properly the risks linked to their activities, and absorb any losses they may incur in doing business while still preserving the financing of the real economy."
Martin Schulz, the president of the Parliament,
described the vote as “a
milestone in our efforts to make the financial system more secure and
transparent”. MEPs from all political groups welcomed the new rules.
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