Saturday, June 27, 2015

Regulators Plan To Extend Bank Bonus Clawback To 10 Years


Wed., June 24, 2015
Banks will be able to claw back bonuses from their most senior managers for up to a decade under rules published on Tuesday by UK regulators, the Financial Times reported. The Prudential Regulation Authority and Financial Conduct Authority said in a joint statement on Tuesday that they were pushing ahead with rules for a wider seven-year clawback period, but that a further three years is being considered for the top tier of banks’ management where regulators find problems, to run concurrently with a seven-year bonus-deferral period. Andrew Bailey, chief executive of the PRA said: “Our intention is that people in positions of responsibility are rewarded for behaviour which fosters a culture of effective risk management and thus promotes the safety and soundness of individual institutions.” The rules give the UK one of the most stringent regimes governing bonuses and pay. As well as pushing up the clawback period, bonuses can be deferred for as long as seven years for senior managers and five for all other staff who take “material risks”. This is far above the European Union minimum, which dictates that 40 per cent of variable pay be deferred for at least three years.

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