EU

HSBC has given 15 of its top bankers “fixed pay allowance arrangements” worth £7.1m under a controversial new pay scheme designed to dodge tough new European Union rules on bankers’ bonuses…The awards are part of big banks’ plans to increase the basic pay of executives to sidestep tough new EU rules designed to clamp down on excessive bonuses. Banks have turned to awarding fixed pay allowances after the EU ruled to cap bonuses to 200% of salary, even if shareholders wanted to approve higher payments. The new payments are counted as fixed pay, which means banks can, with shareholder approval, pay bonuses of 200% of bankers’ collective basic pay and fixed pay allowances. The fresh money, which is not subject to clawbacks designed to retrospectively recoup bonuses in the event of any wrongdoing emerging in the future, covers the first half of the year – and bankers can look forward to further payments every three months. A fifth of the shares will vest in March 2015, with the rest locked up until 2020. [Guardian]

As long as threats are being issued over the matter, Citigroup would like to remind the U.K. that without the EU, it is just a small island country that is no easier to get to from New York than Frankfurt. Read more »

Unlike mortgage-backed securities, supranational political entities simply cannot have this many sub-prime components and expect to keep its triple-A rating, according to S&P’s flawless debt-rating system. Read more »

  • 29 Jul 2013 at 3:39 PM
  • Banks

Bonus Watch ’14 And Beyond: Europe

The EU is amending its hilariously easy-to-skirt bonus restrictions, to punish you, should your firm allow its Tier 1 capital ratios fall below an arbitrary (and possibly variable) level. Read more »

  • 11 Jul 2013 at 3:45 PM
  • Banks

Germany Says ‘Nein’ To EU Bank Shutdown Plan

In case you had any doubt as to who actually runs the European Union, it’s her. Read more »

The thing about antitrust law is that it’s so understandable. Not in the sense that a human can easily understand antitrust law, particularly, just that it’s easy to understand where the people who violate it are coming from.1 This EU antitrust case against 13 banks for “colluding to prevent the lucrative global business of trading credit derivatives from moving onto regulated exchanges and away from markets controlled by the banks themselves,” for instance. Like, here you are in 2006 or whatever, and you’re a big bank, and you’ve built yourself a nice little business buying and selling credit default swaps. This generates information and that information is useful; it’s even more useful if you share it with your other CDS-trading friends. So you and your big-bank friends and your ISDA and your Markit get together to share trade data, just like those guys did under that buttonwood tree that one time. Once you’ve got trade data, for instance, you can make an index, and so you can trade index CDS, which means you can move from having a weird niche product to a macro credit product, and it is good. Also you can gouge customers because, y’know, it’s OTC and stuff.

Anyway one day an exchange comes to you and says “we’d like to take all your data and use it to massively undercut you on price and drive you out of this lucrative little business you got here, whaddaya say?” And so obviously you say no. Read more »

David Cameron hasn’t been able to figure out how to fix his own country’s economy, or whether he wants that country to remain in the EU. But he’s certain of one thing: The way to fix the global economy is a free-trade pact between the U.S. and the EU.

“When times are tough, some want to put the barriers up, to look inwards, and to protect themselves from the world,” Cameron writes in the Journal, possibly describing several prominent, senior members of his own party. Read more »