EU moves to cap bank bonuses at 2 times annual salary
European lawmakers drafted an agreement Thursday that would ban bonuses in the financial sector of anything larger than two times the employee's annual salary.
The European parliament put together the framework of an agreement that would see bonuses capped at the worker's annual salary, but allow for a 2:1 bonus to salary ratio only with the express permission of the company's shareholders.
The agreement would cover all financial firms in Europe, regardless of how profitable they are, and whether they received any taxpayer support during the financial crisis. But it is dependent on EU member nations ratifying the agreement in their own parliaments.
The move is unlikely to be approved by governments in England and Germany, two nations whose financial capitals, London and Frankfurt, rely heavily on the financial sector.
The move is part of a broader push among European legislators to reform the banking sector into a mechanism to improve the standard of living on the continent, not merely a money making machine solely driven to create wealth for shareholders and employees no matter the cost.
Opposition to the banking sector has been palpable for the last few years after a series of high-profile bank failures required taxpayer bailouts and biting austerity measures in a number of countries.