FINANCIAL SERVICES
CEBS guidelines on bankers’ pay - PwC reaction
Remuneration guidelines issued by the Committee of European Banking Supervisors (CEBS) will make it more likely that banks move operations, or at least expand, outside of the European Union, according to PricewaterhouseCoopers.
PwC reckons the CEBS proposals published on 8 October 2010 make the European regulation of banking pay “among the most stringent” and they confirm the extension of the provisions to the worldwide operations of European banks.
Jon Terry, reward partner at PwC, said: “This will be a huge disappointment to the European Banking industry, which had hoped for a more pragmatic interpretation of the CRD III requirements. Of particular concern will be the requirements that will apply to European banks operating, for example, in Asia, compared with local firms.”
Terry warned that this could result in banks relocating their businesses. "Unfortunately this deviation from global trends in banking remuneration could make it more likely that banks move operations, or at least expand, outside of the European Union," he said.
"The Financial Stability Board principles, endorsed by the G20, were a hard-won compromise that was in many ways a victory for internationally co-ordinated regulatory action. In taking these steps the European Union is removing a level playing field other than within its own borders. Many banking organisations could question why a globally mobile bank employee would continue to work for a European institution that will subject their pay to these provisions as opposed to a non-EU competitor bank."
%ADVERT%
The CEBS guidance clarifies the provisions within CRD III which enable the remuneration requirements to be applied proportionately based on the nature of the organisation, or the nature of an individual's role within the organisation. Terry said: “The one bright spot of the CEBS guidance is that the proportionality provisions are generally sensible, and aligned with the FSA's own guidance already issued as part of consultation on the new Remuneration Code in the UK. While all firms must consider the Code in detail and its applicability to their circumstances, the proportionality provisions should make extension of the scope of the Code to around 2,500 UK firms reasonably manageable."
Want to know more?
PricewaterhouseCoopers provides “industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders”. Visit PwC’s UK web site at www.pwc.com/uk.