A CONSORTIUM of banks have appealed to the European Parliament to vote against new rules that would curb their annual bonuses to the same level as their annual salary, in a move they warn would damage their businesses.
The Association for Financial Markets in Europe (AFME), an industry group representing banks across the continent, has written to some Members of the European Parliament (MEPs) this weekend urging them not to support a resolution that would impose a fixed one-to-one ratio between a banker’s salary and bonus.
The proposal is part of a long list of amendments to the Capital Requirements Directive (CRD), set to be voted on today by the European parliament’s economics and monetary affairs committee.
The letter, sent to MEPs on Friday and signed by AFME chief executive Simon Lewis, argues that rather than cutting overall compensation, the amendment is likely to backfire as banks raise basic salaries.
The letter said: “A legislated ratio of fixed to variable remuneration runs a real risk of re-introducing fragility to the European banking system. Such a requirement is likely to result in increased fixed remuneration, as a result of banks’ need to compete for talent in a global industry. A bank with higher fixed costs is much more likely to suffer dangerous losses when revenues drop.”
Last month, City A.M reported that AFME had consulted with lawyers Clifford Chance over suing the EU if Brussels imposed such restrictions.