Financial Regulatory Forum

BREAKINGVIEWS – Shareholders can’t do board’s work on U.K. bank bonuses

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Peter Thal Larsen

LONDON, March 25 (Reuters Breakingviews) – The British government may have stopped short of regulating bank pay. But it is sparing no effort in encouraging others to rein in excess bonuses. Non-executive directors have already been handed a checklist for scrutinising pay. Now ministers want shareholders to make their voices heard as well.

During the boom, investors occasionally grumbled about pay for executive directors. But they almost never worried about remuneration of bankers below board level. They were free to earn as much as they could get away with.

Ministers want those pay packages to become more controversial. Draft regulations published earlier in March will force banks to disclose the number of employees earning more than half a million pounds. These “executive remuneration reports” will be submitted to shareholders for approval.

Now Paul Myners, the UK’s City minister, has suggested giving shareholders the power to vote on pay packages before they are approved. This seems sensible: it would allow investors to influence bonuses before they were awarded, rather than registering an empty protest afterwards.

US’ Geithner says bank fee can recoup AIG bonuses

By David Lawder

WASHINGTON, Feb 3 (Reuters) – U.S. Treasury Secretary Timothy Geithner on Wednesday said insurer AIG’s contracts to pay hundreds of millions of dollars in bonuses were “outrageous” and appealed to Congress to help recoup the payments.

Geithner said Congress could help recover the “deeply irresponsible” bonuses by passing an Obama administration proposal to levy fees on large financial firms.

“Those contracts were outrageous. They should never have been permitted,” Geithner said in testimony to the U.S. House of Representatives Ways and Means Committee.

Major global banks split on regulation battle

By Lisa Jucca and Martin Howell

DAVOS, Switzerland, Jan 29 (Reuters) – The world’s top financiers are at odds about how to fight back against a global push for tougher financial regulation, with commercial and investment banks struggling to reach common ground.

Top executives from Wall Street and Europe’s leading banks have been holding behind-the-scenes talks at the World Economic Forum in the Swiss ski resort of Davos, sources close to the negotiations said, but a deal has proved elusive.

Wall Street’s largest and some major European investment banks argued in favour of a tough common front against politicians who are calling for much tougher measures to regulate the industry in the wake of the financial crisis.

ANALYSIS – Obama attacks on banks fall flat but may persist

By Karey Wutkowski

WASHINGTON, Jan 20 (Reuters) – The Obama administration’s Wall Street bashing fell flat among voters in Massachusetts, but that doesn’t mean Democrats have ended their anti-bank rhetoric.

Major U.S. banks, which returned to sizable profits and lavish bonuses just months after taxpayers bailed out the financial system, represent a convenient target for politicians to score points with voters.

“It is too easy and ripe and necessary a target for the Obama White House because they’ve been labeled as protecting the banks … during the whole first year of their administration,” said Ethan Siegal, an analyst with the Washington Exchange, a private firms that tracks Congress and the White House for institutional investors.

BREAKINGVIEWS – Goldman bonus delay raises puzzling questions

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By George Hay

LONDON, Jan 19 (Reuters Breakingviews) – Goldman Sachs is taking its time, but it’s not clear why. Employees at the investment bank are usually told their annual bonus a few days before full-year results. But even though shareholders will discover the total amount spent on compensation on results day this Thursday, staff must now wait until next week to hear their individual windfall.

Goldman’s own explanation for the delay is that the welter of new regulations in 2009 has caused some slippage in working out individual bonuses. The G20 guidelines and the UK’s 50 percent tax on payouts over 25,000 pounds mean banks have new shackles, while Goldman’s conversion to a bank holding company means its financial year ends in December instead of a month earlier.

Deutsche Bank raises salaries as bonus tax looms

    FRANKFURT, Jan 19 (Reuters) – Deutsche Bank <DBKGn.DE> is raising fixed salaries for staff and cutting variable pay, Germany’s flagship lender said on Tuesday as regulators and politicians pursue a clampdown on bonuses.
   Deutsche Bank said the move arose from a review to ensure pay “remains competitive”.  (more…)

New York Attorney General Cuomo seeks 2009 bonus data from Wall Street

By Elinor Comlay and Jonathan Stempel

NEW YORK, Jan 11 (Reuters) – New York’s attorney general asked eight major U.S. banks to turn over data on planned bonuses for 2009, amid a growing public outcry over payouts in light of the industry’s role in the near-collapse of the financial system and recession.

Andrew Cuomo made the demand Monday to the banks that were first to receive federal bailout money in the fall of 2008: Bank of America Corp, Bank of New York Mellon Corp, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley, State Street Corp and Wells Fargo & Co.

These banks have all repaid infusions taken from the government’s much-maligned Troubled Asset Relief Program (TARP), though some of the U.S. investment in Citigroup has been converted into common stock.

France joins UK to target traders in bonus tax move

By Sudip Kar-Gupta and Sumeet Desai

PARIS/LONDON, Dec 16 (Reuters) – France singled out frontline financial traders for a special 50 percent tax on bonuses, following Britain by tapping into public anger over the pay deals of bankers whom many blame for the financial crisis.

Britain plans to tax bonuses for all bankers, whether merger and acquisition specialists, credit providers or trading room stars, while the French moves announced on Wednesday are restricted to those trading financial instruments.

Both countries’ measures will apply above certain thresholds, with the French measure for instance targeting bonuses above 27,500 euros ($40,060).

Banks expected to swallow most of new UK bonus tax

By Steve Slater

LONDON, Dec 11 (Reuters) – Banks are likely to swallow the bulk of the cost of a shock UK tax on bonuses unveiled this week, rather than pass it on to staff or find loopholes, as more countries join the clampdown on payouts, industry experts and sources said.

Britain slapped a special 50 percent tax on bank bonuses on Wednesday, provoking outrage across the industry and raising fears that London will lose talented staff and business to rival financial centres.

But France looks set to follow with its own one-off tax and Germany and other countries may clamp down on the free-wheeling bonus culture that critics say fueled the financial crisis. If more follow, it could reduce the impact on London and also prompt banks to absorb most of the cost, experts said.

Largest German banks to enforce bonus rules in 2009

CEO of Deutsche Bank Josef Ackermann holds his speech during the Euro Finance Week in Frankfurt November 20, 2009. REUTERS/Ralph Orlowski By Philipp Halstrick and Edward Taylor

FRANKFURT, Dec 10 (Reuters) – Germany’s largest financial companies have agreed to enforce the Group of 20 recommendations on bonus rules in 2009, a year before they must, people familiar with the matter said on Thursday.

German regulators had demanded that banks and insurers such as Deutsche Bank adopt the recommendations from 2010.

The G20 rules which were drawn up in the wake of the financial crisis require bonus payouts to be deferred over time, a move designed to discourage short-term risk taking.