Last updated: February 3, 2012 11:37 am

Dutch left parties call for bank bonus ban

The Dutch Labour and Socialist parties have called for a complete ban on bonuses in the Netherlands’ banking and insurance industries, a move that could put the country at the forefront of international efforts to restrict financial sector pay.

Ronald Plasterk, the Labour party’s spokesman for financial affairs, said the parties were working on a proposal and would present it to parliament shortly.

Besides banning bonuses, the bill would limit other forms of variable incentive pay to 20 per cent of total salary.

“These bonuses induce precisely the sort of behaviour that caused the banking crisis,” Mr Plasterk told the Financial Times.

A bonus ban could pass despite the objections of the conservative government, if it can win support from two potential allies: the GreenLeft party, and the populist Party for Freedom (PVV) of Geert Wilders.

Roland van Vliet, the PVV’s representative for financial affairs, told the Financial Times via text message that his party would “wait for the precise proposal and look at it with interest”.

Bruno Braakhuis, the GreenLeft party spokesperson for financial affairs, said the party would not support a flat ban on bonuses but would back a bill if the focus shifted to the criteria for variable compensation. He said a flat ban could drive banks to substitute salary rises for bonuses.

Jan Kees de Jager, finance minister, told parliament the ban would be “a step too far”. He added: “Self-regulation should be able to force a moderation of bonuses.”

The Party for Freedom is a rightwing party that backs the conservative minority government. But its economic policies are centrist and it worked with Labour, the Socialists and GreenLeft to pass a law last year that would have clawed back bonuses paid to executives at Dutch financial institutions that owed the state due to bail-outs during the financial crisis.

Executives at the companies, including bancassurer ING, renounced those bonuses under popular pressure. But public anger has been rekindled by suggestions that this year’s annual results might include a new round of bonuses.

The proposal chimes with a swing to the left in Dutch politics, where the Socialist party has risen to the top of recent polls. Parliament recently completed an exhaustive investigation of the Dutch state’s handling of the 2008-09 financial crisis, when it spent tens of billions of euros to bail out former national banking leader ABN Amro and rescue ING, and several smaller banks.

The government has warned that a bonus ban could lead top financial talent to emigrate and damage the country’s financial sector.

“If the tone at the top is that they run away if they cannot score their huge bonuses, how will we ever get the culture change that the sector needs?” Mr Plasterk responded.

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