Capital Requirements Directive on the verge of agreement
June 29, 2010 12:00 AM
Liberal Democrat Euro MP Sharon Bowles, who also chairs the European Parliament´s influential economic and monetary affairs committee, has successfully added amendments to a European directive which will effectively put a stop to directors of financial institutions walking away with massive pension bonuses if they don´t perform.
The amendments will put an end to schemes like that given to Fred Goodwin who walked away from RBS in 2007 with a £17 million pension fund, despite the taxpayer bailing out RBS to the tune of £54 billion.
Sharon´s amendments also introduce greater retention of all bonuses in the form of bank capital.
These rules will come into force on 31st December 2010 and will cover bonuses paid out this year.
Sharon Bowles said:
"When I first suggested these amendments, many thought they would not fly. Now it is already mainstream thinking that shares are not always the best instrument to align employee interests with stability of the financial system, and that my "contingent capital" has a role.
Finally we can wave goodbye and good riddance to Fred Goodwin style pension pots and huge upfront cash bonuses as a result of this legislation.
The directive will also introduce important capital requirements to trading books and should help cut down on casino banking."
ENDS
Note to editors: The ECON committee has submitted the agreed text for voting in Parliament next Wednesday and it will finally be approved by Ecofin on Tuesday 13th July.
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