Bankers and fund managers on the run

Happy with the success of banning bankers’ bonuses of more than twice fixed pay, European policy makers are pressing for tougher rules on fund managers, too, to eliminate what German lawmakers called the industry’s “gambler mentality”. Fund managers will respond by increasing fixed salaries, moving overseas and pulling products from Europe if they can’t dilute the rules, say industry lobby groups.

The European parliament's vote to cap bonuses in the asset-management industry could affect two thirds of senior fund managers. Bonuses should not exceed base salaries for managers of mutual funds regulated by the European Union, known as UCITS. The rules would cover 5 trillion euros of assets in UCITS, which include funds managed outside Europe and some linked to hedge-fund strategies such as John Paulson’s New York-based Paulson & Co, writes Bloomberg.

Managers’ “base salary will increase, they will relocate to another country or move completely away from any type of EU bank or fund manager,” said Hakan Enver, operations director for financial services at recruiter Morgan McKinley. “Financial-services organizations may also become more savvy in the way they remunerate their high-earning employees.”

The European parliament's vote to cap bonuses in the asset-management industry could affect two thirds of senior fund managers. Bonuses should not exceed base salaries for managers of mutual funds regulated by the European Union, known as UCITS. The rules would cover 5 trillion euros of assets in UCITS, which include funds managed outside Europe and some linked to hedge-fund strategies such as John Paulson’s New York-based Paulson & Co, writes Bloomberg

Managers’ “base salary will increase, they will relocate to another country or move completely away from any type of EU bank or fund manager,” said Hakan Enver, operations director for financial services at recruiter Morgan McKinley. “Financial-services organizations may also become more savvy in the way they remunerate their high-earning employees.”

(04|2013) Source: Bloomberg