Poor bankers! BNR regulates bonusesPublish date: 28-09-2009
The National Bank of Romania (BNR) has decided not to allow any large bonuses in the banking industry. In terms of performance, bankers will be rewarded depending on their future successes, not just past ones, so developing successful, long-term strategies will be in their best interest.
Practically speaking, local lenders must ensure a reasonable ratio between the basic salary and bonuses granted to executives. In case the banker receives a significant bonus, this must not only be in the form of cash payment, but must also contain a flexible component, such as stocks, bonds, or other funds, according to a new BNR regulation, published in the Official Gazette at the end of last week.
"The concern regarding regulating the payment and bonus policy in banks is international. By issuing this regulation, I believe that BNR is falling in line with similar actions in the European Union. However, in Romania, we cannot talk about exaggerated bonuses in the banking system," the Chairman of the Board of the Bancpost lender, Mihai Bogza, said.
Until 2008, bonuses could go as far as doubling the fixed portion of a banker's payment, amounting to tens or even hundreds of thousands of euro, and 2009 is a "poorer" year from this point of view. "You cannot now make a major profit and then grant bonuses which will damage the bank's long-term sustainability. This is what happened in the United States and we have seen the effects," the Bancpost official added.
According to the new regulation, the payment policy of lenders must be independently assessed at least once a year. The main purpose is to prevent the granting of incentives for taking unnecessary risks.
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