G20 closes in on bonus deal
THE WORLD’S financial superpowers are nearing a compromise on bonuses which would satisfy both the US and counterparts in France and Germany, with the G20 summit in Pittsburgh due to begin tomorrow.
Mandarins from the G20 powers are thrashing out a co-ordinated solution to the remuneration question, that would see banks required to pay a greater proportion of bonuses in deferred shares, the introduction of a clawback and the abolition of guaranteed pay deals over several years.
However, the agreement is expected to shy away from absolute bonus caps for individuals – an idea initially favoured by France and Germany – to avoid placing a stumbling block in the way of economic recovery.
The US and UK have made it clear that they will not support caps for individuals, but have warmed to a proposal that would see banks made subject to a limit on compensation as a percentage of revenue.
Prime Minister Gordon Brown is understood to be behind the proposal, which both the US and the UK see as an acceptable alternative to individual bonus limits.
US regulators have already stepped up efforts to find out banks’ trading positions so they can be sure traders’ bonuses are based on real profits.