| European bonus rules 'will prompt exodus of banks' Brussels pay and bonus proposals would be 'among the most stringent' rules in the world, PwC saysNew proposals to cap bankers' bonuses and restrict cash payments will force banks to relocate outside the City and Europe, it was warned today.As lobbying began ahead of a one-month consultation on the proposals published by the Committee of European Banking Supervisors, experts warned that European banks would be expected to comply with the guidelines wherever they employed their staff - be they in Europe, Asia or the US.Under the proposals, bankers would only receive 20% of their bonuses in cash with the remainder paid in shares or some other financial instrument and deferred for between three and five years.Jon Terry, reward partner at PricewaterhouseCoopers, said the CEBS proposals would give Europe "among the most stringent" pay rules in the world and would force banks to quit the City and other financial centres.The 84-page document, published after a two day meeting of the 27 regulators that make up CEBS, said that while bonuses were not the cause of the banking crisis they did have an impact in encouraging too much risk. "It was generally recognised that excessive remuneration in the financial sector fuelled a risk appetite that was disproportionate to the loss-absorption capacity of institutions and the financial sector as a whole," CEBS said.The regulator intends to hold a public hearing at its London offices on 29 October to allow a full-blown debate about the sweeping changes proposed.Firms across Europe will be required to identify employees around the world who can affect the risks being run and then comply with guidelines on the way their bonuses are paid.The regulators are also planning on setting a cap on the size of the bonuses relative to the size of the employees' salary. While the regulators do not specify what the cap should be, their guidance is for an "explicit maximum ratio on the variable component in relation to the fixed component" of pay. CEBS argued that if the variable component - the bonus - is too high relative to a salary it could encourage too much risk taking; too small and the firm may not be able to cut costs during a poor year.The regulators stress that they are not trying to directly influence "certain numerical levels" of pay but to ensure that firms are not encouraging staff to take too much risk. Experts expect banks to hand out pay rises to sidestep the caps.The proposals also contain provisions for directors of bailed out banks to be denied bonuses and rules out guaranteed bonuses - common in the boom - that run for longer than one year.Jon Terry of PwC said that this could result in a major change in where banks do business."Of particular concern will be the requirements that will apply to European banks operating, for example, in Asia, compared with local firms. 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," Terry said."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," Terry added.CEBS highlighted a number of areas where it was particularly keen to receive responses by its 8 November deadline - including on how long a "retention period" should be for a banker's bonus to be spread across and exactly how bonuses should be structured. For instance, CEBS suggests that at least 50% of an bonus is paid in equity-linked instruments such as shares.It will be the Financial Services Authority's responsibility to implement the CEBS guidelines into its own rules upon which it has already been consulting. The City regulator has already warned that the EU requirements mean that the number of firms covered by its existing code - introduced in the wake of the bank bailouts - will rise from just 27 to 2,500.As part of its scrutiny on pay since the crisis, the FSA has discovered that more than 2,800 people in the City took home more than £1m last year and admits that it has been warned by firms that they could lose staff employed by rivals who are not covered by its code.Executive pay and bonusesEuropeBankingJill Treanorguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
China communist veterans call for free speech Former party officials renew attack on 'invisible black hand' after open letter erased from websitesCommunist party elders are defying China's censors by pressing ahead with a bold demand for freedom of expression, after authorities erased their attack on the "invisible black hand" of central propaganda officials.Twenty-three former senior officials known for their reformist views, including Mao Zedong's secretary Li Rui and a former editor of the People's Daily, Hu Jiwei, signed the open letter.Analysts expressed scepticism about the prospects for change in the near future, and stressed that the signatories no longer had power, but said their action might help people within the leadership to push for reforms.Members of the group said they would publish the letter formally tomorrow, with hundreds more signatures, after censors scrubbed the call from websites."The truth can't be blocked; now the letter has spread," said Xin Ziling, one of its authors and a former official at the China National Defence University."We will release a formal version tomorrow and you will see the names of all the 500 people who signed."Xiao Mo, another signatory and formerly a senior architecture official, added: "They can keep deleting, but we will keep posting. We will not be silenced so easily."He added: "Currently the central propaganda department is the most conservative and stupid force. If one day the Chinese Communist party really goes down, I think the propaganda department should take quite a lot of credit."The letter accuses officials of ignoring China's constitution, which guarantees the rights of free speech and a free press. "This false democracy of formal avowal and concrete denial has become a scandalous mark on the history of world democracy," it says.Several of the signatories have been prevented from publishing books themselves.The document began appearing on websites yesterday, days after the government denounced the decision to give the Nobel peace prize to the dissident Liu Xiaobo, who was jailed after co-writing a document calling for democratic reforms, and before a major political meeting which begins on Friday. It also follows repeated, highly unusual remarks by the Chinese premier, Wen Jiabao, about political reform, most recently in a CNN interview."Even the premier of our country does not have freedom of speech or of the press," the authors complained, pointing out that Chinese media had omitted Wen's advocacy of political reform from reports of his comments.An industry source said authorities summoned the editor-in-chief of the Beijing News after it referred to the remarks, even though it did not quote Wen's most sensitive comments. Staff at the paper said they did not know about such a summons.Signatories said the letter was prompted by the censorship of Wen and the recent detention of Xie Chaoping, a writer who reported corruption, although he has since been released.They distanced themselves from Liu, although some analysts suggested that was to prevent their appeal being written off."Day to day these people have zero power. But in symbolic terms this is certainly unwelcome to Beijing," said Nicholas Bequelin, Asia researcher at Human Rights Watch, noting the respect awarded to elders in China."It adds to the evidence that there is some disquiet within the party regarding the hardline tone and reaction that we have seen."He said there was concern at the inexorable rise in power of the security apparatus.But he cautioned that the disagreement "is not between conservatives and reformers, but between hardliners and more pragmatic leaders".Many in China think freedom of expression would be the most plausible starting point for wider but incremental political reform.Xin said that could be a breakthrough. "It doesn't cost much, it doesn't need investment, it won't cost 4 trillion yuan," he said, referring to the cost of China's stimulus package last year."There are people [in the leadership] who object to the idea of reforms, and their power is not small, but they are not big enough to control the whole society and such a big country."There is a historical inertia, quite severe within the Chinese Communist party, which means many people do not dare to express their opinion. That doesn't mean they don't agree."Xiao said conditions had improved since Mao's time. "If you said something that was 'wrong' during the cultural revolution, you'd be killed … Now there is space, although limited."But he added that censorship had become stricter recently. "They often use 'maintaining stability' as an excuse. True, stability is the foundation of a country, but you cannot maintain stability by suppressing the people … You have to actually solve the problems."Several signatories contacted by the Guardian declined to be interviewed. Others could not be reached.ChinaLiu XiaoboHuman rightsTania Braniganguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Pioneering Mathematician Dies Benoit Mandelbrot, a well-known mathematician who was largely responsible for developing the field of fractal geometry, has died. online.wsj.com |
The week in wildlife Fen raft spiders, swooping osprey and autumn leaves - the pick of this week's images from the natural world guardian.co.uk |
Indonesia struggles as tsunami, volcano tolls rise By SLAMET RIYADI and ACHMAD IBRAHIM 2010-10-27T18:11:28ZMENTAWAI ISLANDS, Indonesia (AP) -- Helicopters with emergency supplies finally landed Wednesday on the remote Indonesian islands slammed by a tsunami that killed more than 300 people, while elsewhere in the archipelago the toll from a volcanic eruption rose to 30, including the mountain's spiritual caretaker.... hosted.ap.org |