EU banker bonuses capped by European Parliament

The global economic crisis was caused in no small part by the shenanigans of the banking and investment industries, so the European Parliament has voted 625-28 in favor of EU banker bonuses being capped as soon as possible. Excessive pension payouts will even fall under new guidelines. The Associated Press reports that any short-term cash bonuses from next year could be limited. Now it's time for the rest of the world to follow suit.</p>

Article resource:EU banker bonuses capped by European Parliament by Personal Money Store

EU banking decision will put hold on advance cash bonus dollars
Early withdrawal of EU banker bonuses will cap at 30 percent of the annual potential bonus. Seventy percent could be withheld until it is certain that business performance warrants the remainder of the annual bonus for the banker. This may create enough incentive to lead European bankers away from the path of short-term personal gain instead of long-term customer satisfaction. Michel Barnier, the EU financial services commissioner, told the AP that "There can be no return to business as usual".

Huge EU banker bonuses can be limited to 20 percent for early withdrawal
Early withdrawal from large-scale bonuses can be limited to 20 percent. However, as the AP indicates, what constitutes a "large" bonus was not spelled out in detail by the European Parliament. The entirety of the European Union – comprised of 27 member countries – could be bound by the ruling on EU banker bonuses. Great Britain, France and Germany won't seem much difference, as they've had banker bonus caps in effect for a while.

Banks can be required to have more money on hand
As part of the new rule, European banks beginning in 2012 may have to keep at least a minimum level of operating capital on hand to cover risky ventures like mortgage-backed securities. 3 to four times more capital will be required than normal, writes the AP. However, banks bound by the new rules are concerned that they'll end up having to set aside even more emergency cash and will lose out when it comes to profit. Try convincing the public to cry for the banks and see what happens.

Citations:

USA Today
usatoday.com/money/world/2010-07-07-eu-bank-bonuses_N.htm