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The Capital Requirements Directive IV implements the capital buffers requiried under Basel III and also includes proposals to claw back bankers’ bonuses if capital dips below the required threshold.
The European parliament initially proposed a cap on bonuses at 100 per cent of salary in April, but last week EU internal markets and services commissioner Michel Barnier called for new shareholder powers over bonuses instead. Barnier’s proposal was met coolly by MEPs.
But German foreign minister Wolfgang Schäuble has now suggested a cap on cash bonuses at 100 per cent of salary, with some shareholder powers.
Labour MEP and ECON vice-chair Arlene McCarthy believes the European parliament is willing to accept the deal. She says: “The most sensible option is to look at the cash bonus, cap it and link it to remuneration. We already have limits for cash bonuses at 20 per cent of the total bonus but under this deal we would also say it can be no more than your fixed salary. It is something we can work with and build a compromise.”
Thinktank Open Europe head of economic research Raoul Ruperel says: “The Commission was never in favour of introducing a cap in CRD IV and it was only after it came back to the Parliament that it was inserted. It was always going to water it down as it just does not see it as a key feature of this legislation.” The British Bankers’ Association wants any rules on bankers’ bonuses to be discussed outside CRD IV.