ECB Chief Targets 'Short-Term' Cash Bonuses At Banks

Law360, London (June 21, 2019, 1:32 PM BST) -- Cash bonuses encourage banks' employees to take a short-sighted approach in which “profits take precedence,” over the long-term health of the lender, the head of Europe's banking watchdog has said.

Andrea Enria, the European Central Bank’s top supervisor, said that among the areas ripe for reform in the sector are the bonuses dangled in front of bankers.

Financial incentives, which are still mostly paid out in cash rather than in stocks or other financial instruments, “encouraged people to concentrate on short-term profits rather than long-term viability,” Enria said.

That means bonuses are not connected to the sustainability of the bank, the ECB's...

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