UPDATE: Dutch Government To Cut Bonuses, Cap Salaries At ABN Amro
January 19 2010 - 12:28PM
Dow Jones News
The Dutch government said Tuesday it will cut bonuses 65% for
board members at state-owned bank ABN Amro Holding NV, following
growing calls for restricted payments for bankers.
In a letter to parliament, Finance Minister Wouter Bos said
bonuses for ABN Amro's executives will be reduced 65% and that they
will have fixed annual salaries of EUR600,000. Bonuses will be
capped at 60% of these annual salaries and won't be paid if the
bank isn't profitable, he added.
The policy is retroactive from Jan. 1, 2009.
A board member at ABN Amro can now earn a maximum amount of
EUR950,000, compared with a figure of "over EUR2 million" at the
former, publicly traded ABN Amro, a spokesman said.
In 2007, ABN Amro was acquired by a consortium of Royal Bank of
Scotland Group PLC (RBS), Banco Santander SA (STD) and Fortis
Holding NV for EUR71 billion. The financial crisis led to a
nationalization of Fortis' share in ABN Amro as well as Fortis'
Dutch banking and insurance operations.
The Dutch government wants to merge most of these assets to
create a new ABN Amro bank, which is expected to be completed in
two years.
The new payment scheme at ABN is stricter than the bankers' code
of conduct that was launched last year by the Netherlands Bankers'
Association. According to this code, board members' bonuses can't
exceed their fixed income by more than 100% and will be paid in
terms of achieved targets. The code also requires strengthening of
governance, risk management and auditing for banks.
Bonus payments to bankers are under fierce criticism after
regulators and governments claimed that high payments tempted
bankers to take too much risk, which eventually contributed to the
financial crisis. Earlier Tuesday, Credit Suisse Group (CS) said it
will slash its planned 2009 senior staff bonuses in the U.K. by 30%
to mitigate the impact of the country's proposed one-time tax of
50% on payouts exceeding GBP25,000.
Last week, Wouter Bos said he wasn't considering introducing a
similar tax in the Netherlands, and that the bankers' code of
conduct would suffice for now.
-By Maarten van Tartwijk, Dow Jones Newswires; +31 20 571 5201;
maarten.vantartwijk@dowjones.com
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