(Bloomberg) — The Dutch Finance Ministry said it’s going to look at whether it can loosen the country’s bonus restriction for parts of the financial sector while leaving it in place for banks’ top brass.
“I will not amend the bonus rules for directors in the financial sector, such as top bankers,” Finance Minister Eelco Heinen said in a letter published on Thursday. But “I want to see whether a suitable solution is possible for specialist staff of financial companies.”
The finance ministry had been considering easing parts of the country’s limits on variable pay, Bloomberg News reported earlier this year. That move could be designed to support banks by focusing on some staff, while seeking to mitigate the risk of a public backlash by excluding senior executives, people familiar with the matter said at the time.
Any softening of the Dutch bonus cap would be the first time the government makes changes favored by banks since introducing some of the regulation a decade ago.
The Dutch cap is far more stringent than restrictions on variable pay applying throughout the rest of the European Union. The country’s banks including ABN Amro Bank NV and ING Groep NV have long cited the rules as a substantial hiring impediment, highlighting IT recruitment as a particular challenge.
The Netherlands put the bonus caps in place in the wake of the 2008 financial crisis that resulted in huge bank bailouts costing the country tens of billions of euros. Top management of banks in which the state owns a stake were banned from receiving any variable pay, and a bonus cap at 20% of fixed salary was subsequently implemented across the rest of the industry.
Heinen said that the financial sector is facing new challenges, such as cyber resilience. “These new security issues are a focus for financial institutions and that requires additional capacity. This makes the availability of employees with specialist knowledge and experience, such as IT specialists, essential,” he said.
He said that an evaluation showed that companies have to search longer for suitable personnel or have to weaken job requirements as they also compete with big technology companies to which the remuneration rules do not apply.
Heinen also said that financial companies have often increased their fixed wages to remain competitive, leading to less cost flexibility in times of economic downturn. That can particularly pose obstacles for fintechs, he wrote in the letter.
–With assistance from Patrick Van Oosterom.
(Updates with details from letter from eighth paragraph.)
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