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Berlin aims to rein in salaries at bailed-out banks

The Local · 2 Oct 2010, 10:05

Published: 02 Oct 2010 10:05 GMT+02:00

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In an interview with German daily Süddeutsche Zeitung, the German finance ministry's parliamentary state secretary Hartmut Koschyk said he has reached a basic agreement on the issue with German Justice Minister Sabine Leutheusser-Schnarrenberger.

The justice ministry is examining how the pay limit could be made legally binding for employees holding current work contracts that already guarantee salaries higher than the €500,000 cap.

Koschyk said an amendment to the bank restructuring law would "allow for a salary cap that includes existing contracts."

Despite the tricky question of overriding existing contracts, German parliamentary finance committee leader Volker Wissing told the paper that the action was in the interest of German taxpayers.

The salary cap would apply to all employees at any banks that were given bailout money to stave off bankruptcy during the global economic crisis – including the nationalised Hypo Real Estate, as well as Commerzbank and several other Landesbanken.

Berlin's move to limit bankers' pay is widely seen as a reaction to media reports claiming that some 200 employees at several institutions worldwide have passed the half-a-million-euro salary mark, including second- and third-tier managers.

Story continues below…

The new rules would take affect next year. A spokesman for Commerzbank would not comment on the government's proposal or its potential effects. Hypo Real Estate stated that none of its employees receive remuneration exceeding €500,000 each year, including bonuses.

The Local/arp

The Local (news@thelocal.de)

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Your comments about this article

10:28 October 2, 2010 by ebermannstadt
A popular decision I'm sure but not necessarily a wise one. The €500,000 plus employees are paid that much because they are essential to the survival of the bank, and would go elsewhere if they were offered more. My brother is one of those well paid bankers and is regularly headhunted. Why? Because he makes his employer profits which cover his salary in just one day! Every day.

There are of course always ways around these rules.
18:35 October 2, 2010 by michael4096
it doesn't need a rocket scientist to make money when you are bailed out every time you get it wrong

however, I agree that there maybe better ways of regulating things
21:25 October 2, 2010 by DinhoPilot
I agree... they should cut! We are tired to pay for other people incompetencies... if the economy was soaring and we were swimming in money yes, but after paying for these stupid bailouts... for 100.000 eur a year I can promise you I will be a goog banker as the suckers that screw up the economy... Do the same crap and cheaper...
02:53 October 3, 2010 by Prufrock2010
ebermannstadt --

Your brother may well be one of the banking geniuses who are indispensable to the financial industry. He may earn his yearly 500,000+ salary every day. But at whose expense? What does he produce of value other than arcane financial instruments that are specifically designed to redistribute wealth to people like him and his ultra-wealthy clients? Moving money around from the middle class to the upper class contributes nothing to society, and most certainly should not be rewarded. The "greed is good" paradigm that has become the gospel of Wall Street and The City was thoroughly debunked two years ago. A pox on the bankers who get even richer off government welfare even as their incompetence and societal disdain is exposed.
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