EDITOR'S LETTERMerryn Somerset Webb
How to regulate virtue
From this year, new EU regulations are to limit bonuses paid in the financial sector to 100% of individual salaries (or 200% if shareholders agree). The idea is first to limit the overall compensation paid out to big bankers and traders, and second to try and rein in the risky behaviour that is encouraged by short-term profit-related incentives.
No one expected the banks to take lying down this infringement of their right to grotesquely overpay people with state-underwritten profits. And they aren’t.
This week we found out how they intend to change to keep things exactly the same. They are – as was predictable – going to raise the fixed pay of their staff using a system of allowances that can be raised or cut depending on a variety of factors. Just like bonuses!
• Read the full editor’s letter here: How to regulate virtue.