Bankers cap their own bonuses in the Netherlands

Dutch banks on Wednesday published a code of conduct to cap executive bonuses. As of 2010 bonuses for management board members will be capped at 100 percent of their annual salary. No limit was set for other bank employees, such as traders.

All the Dutch banks, including global banking giants such as ING, Fortis and ABN Amro, agreed to the new code, which it is hoped will set an international example in the run-up to the G20 meeting in Pittsburgh later this month. Part of that meeting of the world's 19 largest industrial nations plus the European Union will be dedicated to restricting bankers' bonuses, which many people blame for the crisis, although no concrete measures are expected.

The effect of the banking code in the Netherlands will probably be limited. According to the banking association, which drafted the code, there are currently no executives in the Netherlands who receive bonuses exceeding the sum of their fixed salary. The cap also applies to options and stock packages, both in granting and cashing them. Former ABN Amro CEO Rijkman Groenink received a higher remuneration through such a deal.

Bank association chairman Boele Staal explained why the bonus cap is explicitly not intended for traders. "Banks should have the freedom to reward their best traders when they seal a good deal. High bonuses can be justified there. But those rewards should now be related to long-term perspectives and not short-time commercial goals."

The code also includes principles on risk management, corporate governance and remuneration policies. It applies to banking activities in the Netherlands and abroad.

Finance minister Wouter Bos, who had threatened to regulate the bonuses if the sector did not take responsibility, calls the code "a unique step forward."

"For the first time the banking sector takes an initiative like this. That is a giant and a good step on the route of restoring the faith in the financial sector," Bos said.