* Deferred compensation expected to be part of rule
* Large banks to pay more into deposit insurance fund
By Dave Clarke
WASHINGTON, Feb 1 U.S. banking regulators will
meet next week to consider a proposal that would ban bonus
payments that promote "inappropriate" risk-taking by financial
industry executives and employees.
Federal Deposit Insurance Corp Chairman Sheila Bair has
said the rule on incentive-based pay practices will probably
require financial firms to defer some of their executives'
The rule is required by the Dodd-Frank reform law and was
included in response to complaints that financial institutions
were paying executives based on short-term profit gains and
without thinking about the long-term implications for the
companies and markets.
The FDIC board meets on Monday to consider the pay proposal
as well as a final rule, also required by the new law,
requiring large banks to pay more into the government fund used
to cover the cost of seizing failed banks.
The law requires the FDIC to base the assessments it
charges for its deposit insurance fund on a bank's total
liabilities rather than on the amount of domestic deposits held
by an institution.
Due to this change, Bank of America (BAC.N), JPMorgan Chase
& Co (JPM.N) and Citigroup (C.N) combined would pay about $1
billion more annually in assessments under the new
liabilities-based system, according to industry estimates.
"At least from the impacts of Dodd-Frank that are
measurable right now, the change in FDIC assessment is the
single largest impact on us," Citigroup Chief Financial Officer
John Gerspach told analysts during a Jan. 18 conference call.
(Reporting by Dave Clarke, Editing by Lisa Von Ahn)