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EU bank watchdog eyes binding bonus rules

London - Agreeing binding rules to curb excessive bank pay will be a top priority over the next two years, the European Union’s banking watchdog said in its upcoming work programme.

“The crisis has shown the adverse personal incentives could lead to risk-prone behaviour,” the year-old European Banking Authority (EBA) said in a statement.

It introduced guidelines in January 2010 and will now collect data for drawing up binding rules the watchdog will develop in 2012-2013 to ensure “sound remuneration policies”.

The EBA said its main regulatory objective is to play a leading role in the creation of a single rule book for the EU banking system.

A core part of this will be to flesh out 200 rules and other items mainly this year to implement an EU law now being approved that will force banks to hold more capital and liquidity, and introduce a leverage ratio.

“Based upon the capacity available at both the EBA and at the national authorities, it is expected that not all activities can be undertaken as currently proposed without additional human resources at the EBA,” the watchdog said.

The EU’s executive European Commission is expected to publish its delayed draft law on bank crisis resolution in coming weeks.

“In the context of crisis prevention and crisis resolution, the EBA is expected to set further technical standards but also to coordinate and, where applicable, to actively participate in the management of cross-border crisis events,” the watchdog said.
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