Switzerland to introduce strict restrictions on executive pay

Handshake between Enda Kenny, Irish Prime Minister, 2nd from the left, and Michel Barnier, Member of the EC in charge of Internal Market and Services, on the right, in the presence of Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade, on the left, and José Manuel Barroso, President of EC. (EC Audiovisual Services).

Handshake between Enda Kenny, Irish Prime Minister, 2nd from the left, and Michel Barnier, Member of the EC in charge of Internal Market and Services, on the right, in the presence of Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade, on the left, and José Manuel Barroso, President of EC. (EC Audiovisual Services).

Michel Barnier, European Commissioner for Internal Market and Services, speaking recently during the 11th Annual Conference of the European Financial Services, revealed his frustrating experience from this years’ Davos gathering. On that occasion Barnier had the opportunity to meet the leaders of the world financial industry. Talking with them, he said he understood they are considering that the financial crisis is over and they are demanding from market regulators, to withdraw the few remaining rules and controls.

Naturally he was astonished to hear that, because he said he believes that the devastating repercussions of the last financial crisis are still here, haunting the real economy with recession and growing unemployment.  Barnier added that more financial regulations and controls are obviously needed, if we want to avoid more financial crisis. He stressed that, if we let things as they were four years ago, the same causes will produce the same results. In short he concluded that the opinion of the leaders of the world financial industry is wrong on many accounts.

The reasons why the leaders of the major financial firms want to return to the previous market regime, are obviously connected with their ability to continue spinning around the world other peoples’ money. The results of that arrangement are now tantalising the real people and the real businesses. At the same time banks are receiving huge subsidies from taxpayers and central banks, while the few additional restrictions imposed on them during the last two years are not enough to prevent all those financial vultures, from repeating what they did four years ago.

The truth is however that bit by bit the European politicians, under the pressures of the public opinion, are planning more rules and restrictions on the banking industry. As a matter of fact our modern societies strive to find ways and means to ‘emancipate’ themselves from the dependency on the banking sector. This is not an easy task and is being developed in two fronts. In the first place it’s the efforts to impose more capital adequacy obligations to banks, so as they are not able to use many times their depositors money for their own risky bets. In the second place one after the other the developed western countries introduce restrictions on bankers’ bonuses, so as to reduce the incentives for more and more risk taking.

The latest good news, in the path to bring again the financial industry under the control of society, came from an unexpected source. It’s the Swiss people who last weekend voted in a referendum overwhelmingly in favour of imposing the world’s strictest controls on executive pay. The results were almost 70% in favour of the restrictions and the same tendency prevailed in all the 26 cantons. Naturally the banking community of this country came out with arguments for the contrary, threatening that the country’s competitiveness will be harmed.

The Swiss people however know very well that the largest and most ‘competitive’ bank of their country, the UBS, had to be bailout by their government with their money. How competitive can be a bank, if its needs huge government subsidies to survive? Or to put it differently, how competitive can be a bank if it cannot perform its main duty, which is to protect its depositors’ money? We are not talking here about any bank. It’s the ‘mighty’ UBS.

On the same line of events last week in Brussels a ground-breaking agreement was struck between the European Parliament and the Irish Presidency of the Council of the European Union, to cap bankers’ bonuses at their annual salaries. The new rule foresees an exemption for bankers’ bonuses to exceed one annual salary and reach the highest allowed maximum of two salaries, only if this is authorised by holders of at least half of a the bank’s shares. In detail this higher ratio would require the votes of at least 65% of shareholders owning half the shares represented, or of 75% of votes if there is no quorum. By the same token the agreement foresees also that the capital requirements of the banks are increased to such levels, as to prevent their managers from undertaking extra risks with other people’s money.

It’s certain that more restrictions would have been introduced on the financial industry, if the US had followed Europe over these lines. Unfortunately the American economy depends much more on the ‘paper values’ industries, than on the real ones. Fortunately on this side of the Ocean, mainland Europe has based its wellbeing on the real economy rather than on ‘fortresses of paper’.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This man is turning cities into giant sponges to save lives

This credit card has a carbon-emission spending limit

10th ASEM in Milan and the importance of being one: EU’s big challenge on the way to China

EU prolongs economic sanctions on Russia by six months

Carnage must stop in northwest Syria demands Lowcock, as attacks intensify

This app uses augmented reality to rewrite ‘herstory’

Is euro to repeat its past highs with the dollar?

Electronic Cigarettes: Are they really as safe as we think?

Poor Greeks, Irish and Spaniards still pay for the faults of German and French banks

Ensuring the ‘lungs of the planet’ keep us alive: 5 things you need to know about forests and the UN

Darfur: Inter-communal tensions still high despite improved security, Mission head tells Security Council

Parliament: No consent to EU budget until €11.2 billion unpaid bills are settled

5 things you probably didn’t know about global health

The 27 EU leaders did nothing to help May unlock the Brexit talks

Why youth unemployment is so difficult to counter

‘Signs of hope’ toward a political settlement in Yemen, UN special envoy tells Security Council

Indian cities are running out of water

From drought to floods in Somalia; displacement and hunger worsen, says UN

Five things everybody needs to know about the future of Journalism

Dieselgate: Parliament calls for mandatory retrofits of polluting cars

Is the advent of nationalism to destroy economic neo-liberalism?

Online marketplaces can help close Africa’s skills gap

New European frontiers for renewable energy development

UN rights chief ‘extremely concerned’ over deadly crackdown on protesters in Iran

Trust in OECD governments back at pre-crisis levels as governments seek to be more open and engaged

Under fire, UN refugee agency evacuates 135 detained in Libya to Niger

How microfinance develops decent work

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

How smart tech helps cities fight terrorism and crime

Nagasaki is ‘a global inspiration’ for peace, UN chief says marking 73rd anniversary of atomic bombing

5 ways cities can use emerging technologies to fight climate change

How blockchain can cut the cost of new medicine

MWC 2016 LIVE: 5G to trigger disruption, claim industry leaders

Ramp up nuclear power to beat climate change, says UN nuclear chief

Safer roads: More life-saving technology to be mandatory in vehicles

A call for a new crop of innovators

COVID-19: research package welcomed, EU needs to be better equipped in future

We should treat data as a natural resource. Here’s why

Bank resolutions set to remain a national affair

This Pacific island has banned fishing to allow the marine ecosystem to recover

VW emissions scandal: EU unable to protect its consumers against large multinationals

Thursday’s Daily Brief: STIs worldwide, food safety and food prices, updates on Iraq and East Africa

Here’s how the global financial crisis is still affecting your wages

5 facts to know about Africa’s powerhouse – Nigeria

A Sting Exclusive: “Delivering on the Environmental Dimension of the new Sustainable Development Agenda”, Ulf Björnholm underscores from UNEP Brussels

5 ways to get your business ready for AI in 2020

Visiting North Korea, UN relief chief spotlights funding shortfall to meet humanitarian needs

Refugee crisis: Commission proposes a new plan urging EU countries to help Italy

Mental health in times of pandemic: what can each individual do to lessen the burden?

Frans Timmermans on the European Green Deal as a growth strategy at the Bruegel Annual Meetings

Coronavirus – here’s the public health advice on how to protect yourself

Syria: UN chief warns Idlib offensive may set off ‘humanitarian catastrophe’

The ethics of the Medical Technology Civilisation era

6 innovative technologies about to transform our infrastructure

“A divided Europe is not in China’s interests”, Ambassador Zhang of the Chinese Mission to EU welcomes Brussels

A ‘charismatic leader’ dedicated to making the world a better place for all: officials bid farewell to former UN chief Kofi Annan

The ECB proposes a swift solution for SMEs’ financing

Tackling Youth Unemployment

European Commission statement on the adoption of the new energy lending policy of the European Investment Bank Group

EU and Overseas Countries and Territories boost cooperation at annual Forum with €44 million

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s