(Corrects story link in eighth paragraph)
* Morgan Stanley boss opposes caps on compensation
* "War for talent" fosters big paycheques - Deutsche Bank
* Credit Suisse exec says bonuses alone did not cause crisis
(Adds quotes, background)
By Edward Taylor
FRANKFURT, Sept 8 Top bankers defended their
culture of bonuses on Tuesday against an onslaught of regulation
that aims to put them on a tighter leash almost a year after
Lehman Brothers collapsed.
Executives from Credit Suisse Group AG CSGN.VX, Morgan
Stanley (MS.N) and Deutsche Bank AG (DBKGn.DE) said the global
financial system needed reform but defended a bonus-driven
system that critics say encouraged banks to take big risks.
"Bonus payments alone have not caused the financial crisis,"
Credit Suisse Vice Chairman Urs Rohner told the annual Banks in
Transition conference in Germany's financial capital, a two-day
meeting of the banking world's elite.
Morgan Stanley Co-President Walid Chammah said the bank was
"against absolute caps on compensation levels", while Deutsche
Bank Chief Executive Josef Ackermann chimed in that banks could
not let star performers slip through their fingers by being
"The war for talent is in full swing," Ackermann said. "The
question of whether we have learned something focuses too much
on the question of bonuses and leaves out other aspects."
Their comments mark the investment banking industry's
defence against those keen to crimp eye-popping payouts that
critics say led to excessive risk-taking and pushed the
financial system to the edge of the abyss.
Banks are feeling the heat as regulators, central banks and
national governments take measures to try to ensure freewheeling
banks do not again become loose cannons in the economy.
Yet other bankers were less bullish in their defense of
Andreas Treichl, CEO of Austria's Erste Group Bank AG
(ERST.VI), said: "I do believe that bonus payments were
partially responsible for the crisis," adding bankers had to
respect public outrage about the business-as-usual attitude on
HSBC Holdings Plc (HSBA.L) (0005.HK) Chairman Stephen Green
took a similar line. "The list of mistakes is long. Wrong
targets were set for incentives, particularly regarding
remuneration, without regard for sustainability," he said.
Central bankers on Sunday proposed a new regulatory
framework that would force banks to set aside more profits as a
cushion against hard times. [ID:nL6452915] [ID:nL6453654]
Some finance ministers from the Group of 20 countries also
want to explore ways to rein in bonuses. [ID:nL5273733]
Although regulators and politicians broadly agree
risk-hungry behaviour by highly paid bankers was one of the main
causes of the financial crisis, they have struggled to agree on
how to regulate or cap bonuses.
"Superstars are going to get superstar bonuses. That is not
going to change," one London-based banker said, citing the
multi-million-dollar guaranteed bonuses that banks still dangle
to keep top dealmakers or lure them away from rivals.
Assurances about cutting bonuses have followed separate
moves by banks such as Morgan Stanley, UBS AG UBSN.VX and
Citigroup Inc (C.N) to hike basic salaries as a way to keep
remuneration high, even at banks which accepted bailout money.
Bankers in Frankfurt urged a prudent approach to rule-making
and restraint on attempts to scale back sprawling global banks.
HSBC's Green said the term "too big to fail" was unhelpful
because smaller banks also had to be rescued.
He said the lesson from Lehman's demise was instead that
corporate structures need to be simpler so regulators can
understand better which parts they need to monitor.
Deutsche Bank's Ackermann said there was no clear link or
pattern between a good or bad bank based on their business model
or the size of bonuses they awarded.
Lloyds Banking Group Plc (LLOY.L) and Banco Santander SA
(SAN.MC) were both retail banks but enjoyed somewhat different
fortunes, while investment bank Goldman Sachs Group Inc (GS.N)
thrived even as Lehman folded its tent, he noted.
The Swiss executive atop Germany's flagship lender warned
that regulators could choke off an economic rebound if they made
overly restrictive rules.
"It is important that, before we take a detailed look (at
capital requirements), we do a cost-benefit analysis for the
economy. The consequences for credit availability and the price
of credit need to be considered," he said.
But he acknowledged the banking industry did not have enough
capital. "And I deem it right that this has to be corrected."
(Additional reporting by Eva Kuehnen and Christoph Steitz;
Editing by David Holmes)
(Edward.Taylor@thomsonreuters.com; Reuters Messaging:
Edward.Taylor.email@example.com; +49 69 7565 1187)