Belgium to legislate on bankers’ bonuses by next summer

Belgium is to set out a new law effectively ending bonuses for senior bankers at banks that have received bailouts, as part of the lessons learned from the problems at lender Dexia SA, reports Dow Jones’s Frances Robinson. The legislation is due to come in by next summer. “This law will forbid the distribution of variable payments to executive and non-executive directors and members of the management committee,” for banks the government has helped, prime minister Elio Di Rupo told parliament yesterday. “We will also decide, at the same time, on a system of remuneration based on long-term objectives for the financial sector as a whole.” Dexia SA was recapitalised by Belgium and France this month; its retail banking unit was nationalised late last year and is now called Belfius. Peer KBC NV is in the process of repaying its state aid. Di Rupo was addressing Parliament the day after his six-party coalition government announced a budget with savings of €3.44 billion, and a further €300 million for economic relaunch programmes. “The 2013 budget has saved our country from the worst, and will shelter us from the cruel winds of financial speculation,” Di Rupo said. The government will also cut employers’ social security contributions for the first three new employees hired by SMEs and scientific researchers, and try to improve competitiveness by bringing wage increases in line with those of neighbouring countries. Belgium is one of the few remaining countries to have wage indexation, linking salary increases to inflation. “The government will ensure that the index reflects households’ actual buying habits better and faster,” he said. “All this together ensures that the pay gap between Belgium and its neighbouring countries will be reduced by 1.6 percent in 2013 and 2014 alone.”