Bank execs ask for government help to curb bonuses

By Hugo Dixon, Editor, Reuters Breakingviews

LONDON, Feb 3 (BestGrowthStock) – Bank executives are pushing
western governments to co-ordinate a clampdown on bonuses to
protect them from antitrust problems and ensure a level pay
playing field for the industry.

Two chairmen of leading global banks said independently they
had asked the U.S. and UK governments to help them control
bankers’ pay as the financial industry seeks to avoid a further
political backlash triggered by high compensation levels.

The chairman of a leading Wall Street bank said he had told
President Barack Obama that he should organise an industry-wide
crackdown on pay. The chairman of a top UK bank told Reuters
Breakingviews that he had urged the British government to take a
similar line to control bankers’ pay.

Both chairmen, who were speaking on condition of anonymity,
said government intervention was required because no bank could
afford to take unilateral action to crack down on compensation
out of fear that its best people would be poached by rivals that
did not follow suit. They also said that they could not
coordinate controls on pay themselves as this would flout
antitrust laws.

Their pleas come amid mounting political hostility to the
banking industry (Read more about the banking industry recovery.), largely triggered by hefty bonus payments made
by U.S. and European investment banks. The bonuses have been
triggered by a strong rebound in bank profits in 2009, helped by
the unprecedented levels of support offered by governments and
central banks.

Some banks have responded by paying their employees a lower
proportion of income than in the past. Last month Goldman Sachs
(GS.N: ), the U.S. investment bank, said it would pay out 35.8
percent of its 2009 revenues in compensation and benefits, down
from 48 percent in 2008 and the lowest proportion since the bank
went public in 1999.

However, the bank still paid out $16.2 billion in
compensation and benefits, 48 per cent higher than in 2008.

Several investment banks, including Credit Suisse (CSGN.VX: )
and Goldman Sachs, have also responded to the UK bonus tax by
reducing payouts to senior bankers based in London.

The bank chairmen said lower pay levels would help the
industry repair its tarnished image and minimise the current
political backlash against financiers.

Stock Investing

(Editing by Andrew Callus)

Bank execs ask for government help to curb bonuses