The Dutch government has proposed a further tightening of remuneration requirements for domestic banks as part of a wider legislative package of measures aimed to ensure the stability and integrity of the financial sector.
In a letter to the Lower House of Parliament, Finance Minister Wopke Hoekstra outlined four key measures for preventing risky behavior and disregard of customer interest at financial institutions.
Those include a legal obligation for staff to hold company shares paid out as part of fixed remuneration for five years and a legal obligation for financial institutions to explain how the given remuneration relates to the payee's role in society and also seek preliminary approval of their remuneration plans.
The government should also impose legislation that would oblige managers of banks that have received state aid to give back part of their fixed pay, Hoekstra said. The minister is also seeking a tightening of bonus rules for financial services sector staff that is not part of the sector's collective pay agreement. Such employees are currently exempt from the Dutch bonus ceiling of 20% of annual salary, which is well below the European average of 100%.
Hoekstra noted that the primary objective is to restore the trust in the financial sector and added that similar measures have yielded positive results in the past.
However, his proposal could force some financial firms to leave the Dutch market and move their headquarters somewhere else, Het Financieele Dagblad reported Dec. 19.
The Dutch newspaper cited labor lawyer Constant van Tuyll van Serooskerken, who warned the tightening of rules may chase firms away just at a time when many are moving operations to the Netherlands from London in the wake of the U.K.'s exit from the EU.