Germany’s finance minister Friday welcomed as a “positive signal” an agreement between some of the country’s top banks to adhere to a code of self-regulation on bonuses similar to G20 recommendations.
Wolfgang Schaeuble said it was a “positive signal that the biggest German credit institutes and insurers have committed themselves in a statement, voluntarily to stick to the new standards for sustainable remuneration.”
Schaeuble added that the measures “would cover the period before legal steps are put in place,” expected in 2010.
Berlin plans to alter its legislation for credit institutes and oversight laws on insurance firms early in 2010, Schaeuble said, without offering more details.
The minister’s statement came after the head of Germany’s biggest bank, Deutsche Bank’s Josef Ackermann, said that eight large German banks and the three biggest insurance firms would sign up to an accord of self-regulation.
Ackermann said the agreement would be in line with guidelines on bonuses and salaries drawn up by the G20.
Under the self-regulation agreement, bonuses would be “more strongly linked to the sustainable success of the bank and take the risks of the bank business better into account,” Ackermann said.
Alongside Deutsche Bank, other major banks such as Commerzbank and Hypo Vereinsbank have signed up to the accord, as well as Allianz, the country’s largest insurance company.
On Wednesday, Britain announced it would levy a one-off tax of 50 percent on bonuses over 25,000 pounds (41,000 dollars).
A source said Thursday a similar measure targeting top bonuses paid to French bank employees would be introduced early in 2010.
Schaeuble said such measures were necessary to keep the industry in check.
“Compensation systems based on short-term success of the firm were among the causes of the global financial and economic crisis,” he said.
“False incentives induced uncontrollably high risks — with fatal economic consequences.”
However, speaking in Brussels at an EU summit, German Chancellor Angela Merkel said her country’s constitution meant it would be impossible for her to copy London and Paris and slap a one-off tax on bankers’ bonuses.
Merkel said she had no choice but to rule out the idea, warning: “I cannot ride roughshod over the constitution,” in reference to clauses stating that taxes cannot be raised on individual portions of income.
She said she favoured “guarantees to prevent taxpayers once more being asked to dip into their pockets when banks are going through a crisis,” and
added: “That’s where a cross-border financial transaction tax comes in.”
