StanChart: EU bonus cap will 'hurt' competitiveness
March 6, 2013 -- Updated 1428 GMT (2228 HKT)
- StanChart's CFO Meddings apologises for allegations of money laundering affair with Iranian clients
- Richard Meddings says EU proposal to cap banker' bonuses will "hurt" competitiveness
- Meddings says the British bank giant wants to be able to reward its employees for good performance
(CNN) -- A proposal by European policymakers to cap bankers' bonuses will "damage" competitiveness, according to a top executive at Standard Chartered.
The measures -- being imposed to stop banks paying bonuses for excessive risk taking and dodging financial regulations -- create an unfair burden on the London-based bank and could hit its ability to create top-level staff Richard Meddings, Standard Chartered chief financial officer, told CNN.
Meddings' comments come amid a political crackdown on the banking sector after a series of scandals including allegations Standard Chartered breached U.S. regulations over its dealings with rogue states.
In December the bank agreed to pay $327 million to U.S. authorities to settle charges it violated international sanctions on historic transactions with Iran, Burma, Libya and Sudan. Previous fines the bank had agreed to pay to regulators brought the total paid by the British banking giant to $667 million.
When asked if the bank had failed in its ambitions to reach self-imposed value goals, Meddings told CNN's Richard Quest: "We have apologized for the mistakes we made in our historic sanctions regime, and I am happy again to repeat those apologies...we are talking about a period some time ago, in the 2001 to 2007 period."
Meddings said the bank continued to focus on the values, which include responsiveness and trustworthiness, assessing employees against them and good performance. It remains vital to be able to reward employees competitively, Meddings said. "We want to be able to pay our people for good performance."
Last week policymakers of the 27-nation European Union agreed a provisional deal to cap bonuses for bankers at a year's salary, or two years pending shareholder approval.
The highly complex legislation has been heavily criticized by Britain Prime Minister David Cameron, who says it will unfairly impact London's financial sector -- the largest in Europe.
Meddings added: "We compete with banks in Asia and the American banks in Asia, the Middle East and Africa who will not be subject in the same way to those restrictions."
The London-based bank is concerned by that the new measures will hit its staff located outside the European Union as the policy will also apply to operations of EU-based banks in Asia and the U.S.
This week the bank reported a pre-tax profit of almost $7 billion for 2012. In a statement made by the bank's chief executive, Peter Sands, he said the new regulations could hamper Standard Chartered's attempts to attract top talent.
Meddings echoed Sands' comments by adding that lawmakers must "make sure that regulation doesn't impede economic growth."
In an interview with Quest last week, European Member of Parliament Phillipe Lamberts said he would not be "overly concerned" if banker flight rids the European financial sector of excessive risk and circumvention of banking regulation.
Lamberts said: "I am not denying that there are maybe banking jobs moving away from Europe."
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