Barnier bashes banker “bonuses” (again)
Michel Barnier, EU financial services chief, has published a letter to the EBA asking the watchdog to accelerate its investigation into “allowances”. Since the EU’s CRD IV clampdown on banker’s discretionary pay, limiting bonuses to a maximum of one year’s salary (x2 with board approval), there have been widespread press reports of allowance inflation. Stuart Gulliver, CEO of HSBC, receives £1,664,000 pa for allowances, 1.38 times his £1,200,000 annual salary. Mr Barnier’s strongly-worded letter calls for a “coordinated policy response” to end what he seems to regard as egregious behaviour,
“I would like to underline my strong concerns with regard to continuing reports of the use of these allowances. It is important to show a collective pro-active stance on this important matter and address the claims made that the spirit- if not the letter- of union law is being disregarded”.
The EBA is due to report on the subject by year-end, before the 2015 pay-setting round. Mr Barnier urges the EBA to significantly advance their timetable, “I would therefore be very grateful if you could share with us the results of your work on this issue as soon as possible and at the latest by the end of September”. His letter “coincides” with yesterday’s ECJ plea by the UK, the home of the majority of the affected bankers, challenging the EU bonus cap. The ECJ is unlikely to reach a decision by the end of this year and any substantial revision to EU law closing the allowance loophole will not be overseen by Mr Barnier, whose tenure in office is expected to end in October 2014.
The bonus cap is a crude tool at best, and is arguably counter-productive. Bonuses at least have the virtue of being both discretionary and performance-related (if only nominally) and are subject to malus and clawback legal mechanisms. It seems certain that allowances are merely the first round in a long whack-a-mole game between the City and EU authorities.Contact Us