ZBB 2011, 418
Bankersʼ Pay after the 2008 Crisis: Regulatory Reforms in the US and the EU
We examine the political dynamics which led to the codification of the Principles and Standards for sound compensation practices at financial institutions at international (G 20) level and to their subsequent implementation on both sides of the Atlantic. We show that the regulation of bankersʼ pay is presently more detailed and less flexible in Europe than in the US, despite the fact that the 2008 crisis originated in the latter country and the levels of executive pay were no doubt higher in the US than in Europe. We also find that remuneration practices at large US banks are strongly converging towards the international Principles, well beyond what required under applicable regulations. As a result, both EU and US compensation practices at large banks generally converge, whilst the framework is more divergent when considering banks that are less complex and do not have significant international activities.
Contents
- I. Introduction
- II. FSB Principles and Standards
- 1. Rise of the Principles
- 2. An Overview of the Principles
- 3. A Preliminary Assessment
- III. Legal Reforms in the US and Europe
- 1. An Overview
- 2. US Reforms
- 3. EU Reforms
- 3.1 CRD III and CEBS Guidelines
- 3.2 Implementation in the Member States
- IV. EU and US Compensation Practices
- V. Conclusions
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- *)Dr. iur., Professor of Business Law and Capital Markets Law at the University of Genoa and Director of Genoa Centre for Law and Finance.
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- **)Ph.D. (Doctorate) in Economics, Research Associate at the University of Genoa, Department of Commercial Law and at the Genoa Centre for Law and Finance.The paper is based on a lecture held by Prof. Dr. Ferrarini at the joint Symposium of ZBB and the House of Finance at Frankfurt/M., Germany, on 14th October 2011.
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