Brussels, 14/11/2012 (Agence Europe) - On Tuesday 13 November, the European finance ministers took note of the differences of opinion which persist between the Council and the European Parliament over the “CRD IV” legislative package designed to bring to the EU the international Basel III rules, which increase the quality and quantity of banks' own finances (see EUROPE 10707). There are two issues still to be resolved: banking bonuses and the treatment of systemic risks. This situation has given Cypriot finance minister Vassos Shiarly grounds to hope for a definitive political agreement by the end of December, as the European Parliament is keen to enshrine any agreement at the December plenary.
On bonuses, the MEPs want to bring in an obligatory ratio at EU level, to ensure that the variable part can no longer be greater than the fixed part of the remuneration package. “I think it's right to set such a ratio”, said Internal Market Commissioner Michel Barnier, who believes that “the Council needs to be more ambitious on this in order to reach a compromise with Parliament”. A balance needs to be struck between strict rules and a certain amount of room for manoeuvre for the banks, in order to guarantee their competitiveness in an international environment, he told the public debate of the Ecofin Council.
A proposed tested compromise suggests the following elements: - the non-staggered bonus would not exceed the total annual fixed remuneration; - the total bonus may not be more than three times the fixed element of the remuneration unless the majority of shareholders approves a higher figure, but the total bonus may not be more than five times higher than the total annual fixed remuneration; - the shareholders must provide reasons for their decision, indicate the number of persons in question and inform the national supervisor. The United Kingdom has stated that it is in favour of involving shareholders in the remuneration policy.
As regards the treatment of systemic risks, the negotiations aim to bring the position of the Parliament, which wants to impose a capital surcharge requirement on banks of systemic importance, closer to that of the Council, which is committed to keeping in place national flexibility as regards prudential rules.
As for the entry into force of these rules, the G20 has laid down the objective of January 2013. At this stage, there is no question of any extra time. However, the Commission notes that Japan will start applying Basel III in March 2013 and that the United States has announced a delay in its application. (MB/transl.fl)