The European Parliament threw out a proposal Wednesday that would
have extended a recently-agreed clampdown on bankers' pay to fund
managers, amid concerns that the move could harm savers and pension
funds.
European lawmakers in Strasbourg narrowly overturned the proposal, which would have capped fund managers' bonuses at 100% of their salary, and required that half of the bonus be paid in units of the fund the manager runs.
"We have to be proportional, not reactionary, when it comes to regulating the financial markets," said Sharon Bowles, chairwoman of the Parliament's economic affairs committee, who voted against the plan.
Rules restricting bankers' pay shouldn't be extended to the rest of the financial industry because banks alone have a monopoly on liquidity and lending, "both of which are ultimately provided at public expense," Ms. Bowles said.
The Parliament's economic affairs committee agreed in March to insert a bonus cap and curbs on performance fees into a year-old reform proposal for UCITS funds, an investment product aimed at retail investors that can be sold across EU borders with a single authorization from one member country. Such funds have net assets of almost 6.3 trillion euros ($8.22 trillion).
The move came after the Parliament and EU member countries agreed a final compromise on bankers' pay that will forbid bonuses that exceed fixed salary, or twice fixed salary with explicit shareholder approval. The bonus caps, part of a broader law that forces lenders to build up more-robust financial cushions, are designed to reduce incentives for the type of risky behavior widely blamed for contributing to the 2008 financial crisis.
Supporters of the move to extend bonus caps to fund managers argued it was necessary to tackle pay awards that encourage risky speculation, and to create consistency throughout the financial services sector. Asset managers warned it would increase fixed costs and make the industry more vulnerable to cyclical fluctuations.
"The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans," said Syed Kamall, a conservative lawmaker.
Sven Giegold, the lawmaker leading the Parliament's work on the fund manager rules, said Wednesday's vote had "prevented any significant, comprehensive change of the culture in the financial industry."
"Today is a black day for investor protection in Europe," Mr. Giegold said.
European lawmakers in Strasbourg narrowly overturned the proposal, which would have capped fund managers' bonuses at 100% of their salary, and required that half of the bonus be paid in units of the fund the manager runs.
"We have to be proportional, not reactionary, when it comes to regulating the financial markets," said Sharon Bowles, chairwoman of the Parliament's economic affairs committee, who voted against the plan.
Rules restricting bankers' pay shouldn't be extended to the rest of the financial industry because banks alone have a monopoly on liquidity and lending, "both of which are ultimately provided at public expense," Ms. Bowles said.
The Parliament's economic affairs committee agreed in March to insert a bonus cap and curbs on performance fees into a year-old reform proposal for UCITS funds, an investment product aimed at retail investors that can be sold across EU borders with a single authorization from one member country. Such funds have net assets of almost 6.3 trillion euros ($8.22 trillion).
The move came after the Parliament and EU member countries agreed a final compromise on bankers' pay that will forbid bonuses that exceed fixed salary, or twice fixed salary with explicit shareholder approval. The bonus caps, part of a broader law that forces lenders to build up more-robust financial cushions, are designed to reduce incentives for the type of risky behavior widely blamed for contributing to the 2008 financial crisis.
Supporters of the move to extend bonus caps to fund managers argued it was necessary to tackle pay awards that encourage risky speculation, and to create consistency throughout the financial services sector. Asset managers warned it would increase fixed costs and make the industry more vulnerable to cyclical fluctuations.
"The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans," said Syed Kamall, a conservative lawmaker.
Sven Giegold, the lawmaker leading the Parliament's work on the fund manager rules, said Wednesday's vote had "prevented any significant, comprehensive change of the culture in the financial industry."
"Today is a black day for investor protection in Europe," Mr. Giegold said.
0 comments:
Post a Comment