FRANKFURT: Top bankers defended their culture of bonuses on Tuesday against an onslaught of regulation that aims to put them on a tighter leash. “We’re against absolute caps on compensation levels,” Morgan Stanley Co-President Walid Chammah told the annual Banks in Transition conference in Germany’s financial capital, a two-day meeting of the banking world’s elite.
Deutsche Bank AG Chief Executive Josef Ackermann chimed in that banks could not let star staff slip through their fingers by being tight fisted. “The war for talent is in full swing,” he said. “The question of whether we have learned something focuses too much on the question of bonuses and leaves out other aspects.”
Their comments mark the investment bank industry’s defense against those keen to crimp eye-popping payouts that critics say led to excessive risk-taking and pushed the financial system to the edge of the abyss.
The Frankfurt event comes on the eve of the anniversary of investment bank Lehman Brothers’ collapse, a watershed in the financial crisis as investors realized with horror, and at times panic, that even leading institutions were not too big to fail. Banks are feeling the heat as regulators, central banks and national governments take measures to try to ensure freewheeling banks do not again become loose cannons in the economy. Central bankers on Sunday proposed a new regulatory framework that would force banks to set aside more profits as a cushion against hard times.
Some finance ministers from the Group of 20 countries also want to explore ways to rein in bonuses. Although regulators and politicians broadly agree that risk-hungry behavior by highly paid bankers was one of the main causes of the financial crisis, they have struggled to agree on how to regulate or cap bonuses.