Trichet warns on bankers’ bonuses

Big bonuses awarded to bankers could help sow the seeds of a future financial crisis, Jean-Claude Trichet, European Central Bank president, warned in a speech in London on the 11 December 2009.

A culture of excessive financial rewards for individuals encouraged 'self-referential' and 'self-serving' banking. Instead of paying out 'unwarranted levels of compensation or bonuses', bankers should use higher profits to strengthen their capital positions, he said.

His comments amounted to the strongest criticism yet from the ECB of excessive bank remuneration, and appeared designed to buttress the political pressure banks have felt from European governments in December 2009, following the UK’s decision to impose a super-tax on bankers’ bonuses on the 9 December 2009.

ESO: Background information: France to impose tax on bank bonuses http://www.europeansources.info/record/france-to-impose-tax-on-bank-bonuses-entente-fiscale/

ECB: Speech, 11.12.09: Macro-prudential supervision in Europe. Speech by Jean-Claude Trichet, President of the ECB The Economist’s 2nd City Lecture London, 11 December 2009 http://www.ecb.int/press/key/date/2009/html/sp091211_2.en.html

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