An Irish MEP has slammed an EU decision to cap bankers’ bonuses as going “nowhere near far enough”.
Fine Gael’s Jim Higgins said the vote by the European Parliament to limit bonuses for those in financial institutions to one year’s salary was “ridiculous” and begged the question as to how much bankers have been getting in the past.
Over 600 MEPs in Strasbourg backed the proposal this week as part of a range of measures aimed at stopping the kind of speculative risk-taking that created widespread instability in the sector. The Capital Requirements Directive, which takes effect from next January, recommends that bankers’ bonuses should not amount to any more than the size of their salary. However, it stipulates that bonuses could extend further to a maximum of twice your salary, if two-thirds of shareholders agree.
Speaking after the vote, Mr Higgins said banks should not be allowed to award bonuses at all if they are functioning at a loss or are in financial difficulty. He also expressed the hope that new measures ensuring greater transparency in banking will mean that banks are too “embarrassed” to give the same level of bonuses as in the past.
“At least they will be held accountable in the court of public opinion. We will be able to see the exact level of bonuses bankers are receiving and name and shame those guilty of taking inflated bonuses,” said Mr Higgins.
His Fine Gael colleague Gay Mitchell, however, defended the measures, claiming it was “perfectly reasonable” to allow bonuses of twice your annual salary, as long as most shareholders agreed.
Mr Mitchell, a member of the European Parliament’s Economic and Monetary Affairs Committee, admitted that the provisions were “generous” but said it would mean that directors wouldn’t be able to do “whatever they wanted and pay themselves huge bonuses.”
Elsewhere, Labour MEP Phil Prendergast described the bonus cap as a “welcome breakthrough”, which she said should help to “deter short-termism and risky behaviour.”