Europe Set to Link Banking Bonuses to Basic Salaries
THE DAILY TELEGRAPH: European regulators are set to tether banker bonuses to the level of basic salaries in a move that could deal the most severe blow yet to the culture of multi-million pound pay-outs.

Under the terms of proposals, expected to be published on Friday, investment banks may be forced to limit bonuses to a set multiple of bankers' salaries that would be agreed with financial watchdogs.

The Committee of European Bank Supervisors (CEBS) wants to see an end to bonuses that can be up to 50 times bigger than a banker's salary. Instead, the group, which is based in London and comprises members of the 27 European Union member states, wants banks to have to agree a maximum ratio of fixed-income to deferred pay with their national regulators.

Jon Terry, head of reward at PriceWaterhouseCoopers, said: "While CEBS is unlikely to set a specific ratio, we expect them to propose a framework from which banks will work with national regulators on agreed bonus multiples, and then to have to justify them in the context of their risk profiles. This is going to be a radical change for many institutions." >>> Louise Armitstead | Friday, December 10, 2010

This is good news. But does it go far enough to curtail the greed of these money-grubbers? If something isn't done about this selfish culture that we now live in, I fear that the riots on the streets of London last night will look like a picnic in the park by comparison with what awaits us. The system we have now works for the good of one group of people only: the rich. The middle classes have been trampled on for far too long. – © Mark

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Lagarde: Bankers Better Be Careful

HSBC Doubles Salaries Of Investment Bankers
SKY NEWS: Banking giant HSBC is doubling the basic pay of hundreds of its senior investment bankers, Sky News can reveal.

Sky's City editor Mark Kleinman reports that the bank began informing staff in London, Hong Kong and New York about the pay rises last week.

A source close to the bank said some senior managers outside the global banking and markets (GBM) division were also being handed the pay increases.

HSBC's move comes ahead of the annual bank bonus round in the New Year.

"As UK politicians intensify warnings about the payment of mega-bonuses, HSBC may legitimately be able to point to a sharply reduced bonus pot by virtue of the fact that it will have only recently awarded large salary increases," noted Kleinman. Read on and comment >>> Hazel Baker, Sky News Online | Tuesday, November 16, 2010

Niall Ferguson: Warburg on Banks, Bonuses and Morality
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Liberal Democrats Call for Draconian Tax on Bank Bonuses
THE GUARDIAN: • Lord Oakeshott calls for immediate tax
• £7bn expected to be paid out in bonuses this year
• RBS chairman says regulation the only route to reform

A new, more draconian tax on bonuses should be slapped on banks, a leading Liberal Democrat said tonight after the Royal Bank of Scotland chairman admitted that regulation was the only way to restrain the annual bonanza for bankers.

Amid estimates that the City would pay out £7bn in bonuses this year, Lord Oakeshott said the moment had now come to reintroduce a tax on bonuses which, when imposed on the banks last year, brought in £3.5bn for the exchequer.

Oakeshott, a Lib Dem Treasury spokesman, said that the situation was so grave that the government would need to act ahead of the report next year by its independent commission on banking – chaired by Sir John Vickers.

Speaking after David Cameron acknowledged the public's "anger" over bonuses, Oakeshott said: "As the prime minister has made clear, the banks are still paying ever bigger bonuses and not lending to small businesses.

"The answer must be to take immediate action on bonuses and the obvious way is to have a much tougher bonus tax than Labour's feeble feather-duster and much stricter net lending targets to small and medium-sized businesses while we wait for the banking commission to recommend more radical reform." >>> Jill Treanor | Tuesday, October 05, 2010

Credit Suisse Defends Its Bankers' Mid-year Bonus
THE TELEGRAPH: Credit Suisse has defended a decision to award its London-based bankers with a surprise mid-year bonus by claiming that it had no choice after its compliance with British rules on pay backfired.

Credit Suisse defends its bankers' mid-year bonus. Photo: The Telegraph
The Swiss bank suggested its decision to distribute a multi-million pound bonus-round, a move that looks set to re-ignite the row over City pay, was necessary to avoid losing key people to its rivals over the next few months.

Around 400 bankers are thought to have benefited from the windfall payments which will be awarded on Wednesday, in addition to the payments traditionally made at the end of the year.

The bank consulted with the Financial Services Authority (FSA) over the September bonuses, although it is not clear if the Government was warned in advance.

Credit Suisse was at pains to point out that the payments are compliant with the FSA's latest rules and include tough conditions including deferred payment and claw-back provisions.

Even so, the extra payouts, particularly at a time of concerns over a double-dip recession, are likely to reignite the row over City pay.

Politicians and regulators, who have vowed to crack-down on lavish payments by banks in the wake of the financial crisis, will be concerned that the unusual move is a prelude to another controversial bonus season. Read on and comment >>> Louise Armitstead, Chief Business Correspondent | Tuesday, August 31, 2010