The Dutch government wants to introduce legislation that will cap bankers’ bonuses at 20% of their annual salary.
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However, people working for Dutch institutions in other European countries would see bonuses capped at 100% of salary, and outside the EU bonuses could run to 200% of salary.
The rules will apply to the entire Dutch finance industry, including insurance companies.
The new rules will apply from 1 January 2015 providing the legislation is passed by both houses of parliament.
Dutch Finance Minister Jeroen Dijsselbloem in a letter sent to Dutch parliament said that the bonus cap should help curtail excessive risk-taking and avoid future taxpayer bailouts. Banks will also be forced to limit severance pay and claw back bonuses when employees have violated professional standards or are responsible for hefty losses.
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By GlobalDataThe European Union this year agreed to cap bankers’ bonuses at a maximum of one year’s salary in a law that will come into effect on Jan. 1 2014. The bonus can rise to two years if bank shareholders approve.
"The new European rules to set limits on pay do not go far enough in my opinion," Dijsselbloem said. "The time for excessive bonuses and severance pay has passed."
