Banks to face bonus curbs

BANKS with low levels of capital should face a limit on bonus payouts, according to an international body of regulators and central bankers.<br /><br />The Financial Stability Board (FSB) yesterday agreed to submit the proposal to G20 leaders next week, ahead of their summit in Pittsburgh.<br /><br />&ldquo;We will have a link between a bank&rsquo;s total bonus pool and the firm&rsquo;s overall performance,&rdquo; FSB Chairman Mario Draghi said yesterday. &ldquo;It&rsquo;s important that firms conserve profits so they can rebuild capital and support lending.&rdquo;<br /><br />Draghi, who is governor of the Bank of Italy and a former Goldman Sachs managing director, said the new capital requirements would be phased in progressively.<br /><br />Governments are hoping to agree global standards on financial institutions&rsquo; compensation levels at the G20 summit, in a bid to focus workers on long-term gains rather than short-term profits.<br /><br />While France has pushed for an outright cap on bonuses, the UK has rejected them as &ldquo;unworkable&rdquo;.<br /><br />Draghi said guidelines would include recommendations on pay disclosure, vesting periods for options and the possibility of &ldquo;claw-back&rdquo; schemes where bonuses would have to be repaid if deals unravel.