Dutch banks are poised to introduce a new code of conduct from January 1 which will limit the bonuses paid to management board members.
The new code, drawn up by the Dutch banking association, is based on the recommendations of a banking sector committee which said in April banks need to put their customers’ interests before shareholders, develop a new policy towards pay and improve the role of their supervisory boards.
The code of conduct comes at a time of a worldwide crackdown on banking bonuses, which is one of the focuses at the G20 summit in Pittsburg later this month.
One year’s salary
The new code will limit the severance payments and performance related bonuses to board members to one year’s salary. And banks will have to explain in their annual reports why they have deviated from the code if they did so.
But the bonus cap only applies to people at board level. Senior bankers will be eligible for bigger payouts if approved by the supervisory board. The Volkskrant says the NVB fears banks would not keep to a one-year limit for traders, who can earn millions of euros from deals.
An independent monitoring committee will be appointed to monitor their performance.
Finance minister Wouter Bos, who said earlier this week the Netherlands was prepared to go it alone in tackling excessive bonuses, said the code of conduct was a ‘unique step’.
It was a good move towards ‘restoring faith in the financial sector’, he said.
The code also includes a draft for formal moral and ethical declaration which all bankers should sign.
For the provisional code of conduct in English, click here
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