Oireachtas committee backs EU's clampdown on banking bonuses
A key Oireachtas committee has weighed in behind new European Union regulations aimed at clamping down on dangerous banking bonus policies, which are widely believed to have fuelled the global financial crisis.
Brussels plans to ensure that where bonus payments occur in the EU, at least half is made up of shares and 40pc should be deferred over a three-year period.
The aim is to make lenders across the trading bloc adopt more prudent bonus policies, which do not encourage or reward excessive risk-taking.
The joint Oireachtas committee on European Scrutiny has completed a report on the new rules, which is set to be sent to Finance Minister Brian Lenihan over the coming weeks.
The committee, chaired by John Perry TD, also welcomed the fact that the EU directive, expected to be adopted by the end of the year, also includes the power to sanction credit institutions that fail to implement policies consistent with sound risk management.
"There has been a widespread recognition that bonus schemes paid to staff on the basis of short term gains contributed to incentives which led to financial institutions engaging in overly risky business practices," said Mr Perry.
Institutions covered by the Irish banking guarantee are banned from making discretionary bonuses. The new EU rules will apply to them in a post-guarantee environment.