EU May Regulate Banker Pay

Socialist and Green party members of the European Parliament have suggested that the bank capital law should also include pay limits and tighter controls on risk-taking. Udo Bullmann, a German lawmaker who has been tracking the proposed law for the Socialist members, was quoted saying, “Wrong incentives were part of the banking culture that caused the crisis. I expect there will be quite a lot of sympathy among different party groups” for tighter pay restrictions.

Bullmann and Philippe Lamberts, a Belgian lawmaker tracking the law for the Greens in the European Parliament, will ask for a maximum ratio between highest and lowest paid bank personnel. Lamberts had said in an interview that lawmakers “have been adamant” that additional limits on pay are necessary.

Sylvie Watts, a lawyer at Allen & Overy LLP in the U.K., was quoted saying, “It is hard to see how imposing a maximum ratio would work in practice, particularly as so much of bank remuneration is performance linked.” However, perhaps not everyone would be unhappy with the move; Watts added that the measure “could also have the effect of increasing the overall pay levels at the lower end of the pay scale.”