EU vote on fund pay crackdown nears the brink

Michael Bow
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AN EU VOTE on plans to peg bonuses to salaries for money managers is set to go down to the wire on Thursday after a key politician hinted there was still all to play for at the vote.

Green MEP Philippe Lamberts, a former IBM manager who has led plans to cap bankers’ bonuses, is understood to have hinted privately to UK officials that there was still a lack of consensus on proposals to extend the controversial measures to the asset management sector, according to a source.

Earlier this month Lamberts won a landmark vote to limit cash bonuses of bankers across Europe so they do not exceed the salaries that they are paid.

European politicians are set to finalise the plans – known as CRD IV – on Thursday at the same time as the European parliament votes on another directive to limit fund manager, known as Ucits V.

“It’s more likely if they’ve got their pound of flesh on (CRD) then they’ll vote no on Ucits,” the source said.

“[Lamberts] said there was still all to play for and the Greens had yet to convince all the parties on the plan.”

The proposal would ban bonuses for fund managers that exceed salaries and are likely to be introduced for pay packages as early as 2014.

The move would dovetail with a host of initiatives by EU politicians to crack down on pay, including another directive – AIFMD – targeting private equity and hedge fund managers.

It comes as the Green MEP leading the negotiations in the European parliament, Sven Giegold, said he believed the bankers’ bonus cap should be extended to fund managers.

If there is a consensus between the main political parties on the vote, experts say there is still a long way to go before any cap is introduced.

“It’s likely that the Greens and the Socialists will come together to give a majority vote but that isn’t the end of the story, “ said PwC partner Jon Terry. “The battle has not been lost but the industry is on the back foot. It’s an uphill battle.”

A directive to codify Ucits – an acronym for undertakings for collective investment in transferable securities – was originally put in place to allow funds to operate more freely across EU borders.

Thursday’s parliamentary vote on Ucits V will be followed by months of debate between the European Commission and European Council on the plan.