The members of the Committee of European Banking Supervisors (CEBS) met in London at the beginning of October and from the Hungarian side the Hungarian Financial Supervisory Authority (the PSZÁF) participated in the negotiations. The subject of the negotiations was whether or not to limit the income of European bankers. What is the reason for this?

"The chief aim of the regulators was to avoid paying out bonuses in those credit institutions that some states had to provide significant financial assistance to" said spokesperson for PSZÁF, István Binder, to Heti Válasz. "The main focus right now is the creation of a long term incentive system for leaders, since so far they have been interested in producing ever higher annual results," added Binder. It is expected that the bank supervisory authority of each state will independently determine the extent of the limitations.

In the beginning, the European Commission wanted to deal with the issue of remuneration by allowing self-regulation, but this did not lead to the right results and so in the end it decided to introduce a mandatory guideline. Formulating an income policy and internal regulation will become mandatory for credit institutions and investment companies. The greater part of the remuneration would have to be paid over an extended period of 3-5 years rather than in the given year, but only if performance proves to be satisfactory. If an institution does not abide by the stipulations, the supervisory organ will intervene. 

Based on a limitation of salaries, discretely dubbed remuneration policy, the banks would have to define a maximum proportion between bankers' salaries and bonuses, since certain extortionate incomes have stirred up resentment in public opinion. For example, before the financial crisis Bob Diamond, the CEO of Barclays Capital, received a salary of 250 thousand pounds per year (78.5 million forints) and an annual bonus totalling 20 million pounds (6.28 billion forints). According to estimates, seven billion pounds (2,198 billion forints) will be distributed in bonuses in London's financial centre at the beginning of 2011.

Within extra income the proportion of money payments would also be determined. Based on the not yet finalized plans the limitation would be introduced above a certain position or salary level, and would chiefly affect CEOs and top managers dealing with risk management. "The PSZÁF concurred with the fundamental principles of the regulation," emphasised its spokesman to our magazine.   

However, the Hungarian Banking Association was not in agreement. "The issue is not topical in Hungary. The banks operate in an honourable way here, and not one financial institution had to be saved because of the financial crisis," claims János Müller, the Banking Association's chief advisor. Skeptical of CEBS's aspirations, Müller emphasised that "In Hungary the intervention of a salary policy in private, profit-orientated companies should not come up". According to the banking association advisor the proposal was made in cases in which the directors of some banks that received state aid, unethically paid themselves bonuses, as if they had performed well. "Capitalism also needs a regulatory system but if there is interference in what bankers earn, where will we draw the line? It would no longer be a market economy," says Müller.      

There is heated debate on the proposal within CEBS too. According to the Financial Times, the representatives of some EU member countries do not even want to hear about such limitations. According to the newspaper the French and the Spanish bank supervisors share the same view: the limitations would ruin the European financial sectors' competitiveness on a world scale. The business paper claims that it is a certainty that such a limitation policy would lead to an increase in the fixed salaries of bankers since financial top leaders accustomed to the good life and a high income would still have to be paid in some way or other.