ECB signals tougher approach on bankers’ pay

30.01.2015 19:09
ECB signals tougher approach on bankers’ pay

YEREVAN, January 30. / ARKA /. The European Central Bank has signalled a tougher approach on bankers’ pay, announcing that it will launch an examination of bonus payments and share options made by lenders, reported citing The Financial Times.

The ECB, which took the reins for supervising the eurozone’s biggest lenders last November, said on Thursday it had notified banks that it would “thoroughly examine” their policies on variable pay, such as bonuses and share options.

The ECB said it would take banks’ capital situation into account when examining pay, saying remuneration “should be consistent with a bank’s ability to maintain a sound capital base”. It expects the review to take place over the course of 2015.

The ECB’s focus on the capital base follows fractious discussions between regulators and the management of Monte dei Paschi di Siena, Italy’s third-largest bank by assets, according to people familiar with the matter.

Fabrizio Viola, chief executive of Monte Paschi, was forced to cap his salary at euro 500k, from euro 3.5m the previous year, in order to gain Brussels’ approval for its state bailout bonds. But in return for the pay cut, Viola accepted a euro 1.2m bonus that would be awarded by the bank’s board once he succeeded in raising a euro 5bn capital increase demanded by Brussels as a condition of the bank receiving state aid.

The move to assess variable pay across eurozone banks — to be conducted by the ECB’s supervisory wing, known as the single supervisory mechanism — comes amid wider moves by other regulators after the global financial crisis.

The European Banking Authority, which tries to harmonies how national supervisors across the EU implement directives from Brussels, is putting out its own proposals on the matter after its next board meeting at the end of February.-0-

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