Financial Stability Board Chairman Mario Draghi has said regulators are within their rights to limit bankers’ pay as the group works on plans for next week’s Group of 20 meeting in Pittsburgh. “Compensation is now fully in the realm of supervisors,” Draghi said in Paris after a meeting of the group of central bankers, regulators and government officials. “It used to be they were told it was a private contract. It’s now quite clear that when compensation is not aligned with risk taking incentives, regulators have the right to have their say.” Draghi’s FSB will present leaders including President Barack Obama with proposals on banking regulation and remuneration as the G-20 tries to agree on rules to prevent another financial crisis. Draghi said that the group agreed on a set of compensation principles yesterday, according to Bloomberg. The global bonus pools of international banks should be linked to their overall performance, Draghi said. The FSB also wants to ensure that boards of directors have “effective” oversight of pay, that bonuses are deferred and can be clawed-back if the bank’s profit falters. Policies developed by Stability Board are implemented by national authorities and policed by peer review and the International Monetary Fund.
Draghi Insists Regulators Have the Right to Limit Bankers’ Pay
The global bonus pools of international banks should be linked to their overall performance, Draghi said. The FSB also wants to ensure that boards of directors have “effective” oversight of pay, that bonuses are deferred and can be clawed- back if the bank’s profit falters.
September 16, 2009