BRUSSELS European lawmakers are likely to shy away from demanding strict bonus curbs on fund managers, a leading lawmaker said on Tuesday, as doubts grow about replicating planned caps on bankers' pay.
The move to cap bank bonuses bolstered the legislature's standing among European citizens who blamed a bonus-driven banking culture for the reckless risk-taking that ultimately triggered the global financial crisis.
Earlier this year, a parliamentary panel called for tighter control of fund manager pay too, but on the eve of a vote in Strasbourg to decide the full European Parliament's position, support has dwindled for clamping down on a group viewed more favorably than bankers.
Unlike banks, fund managers are not blamed for the financial crisis. Their role as guardian of pension funds is seen as posing little threat to financial stability.
"A majority in the parliament could be in favor of (removing proposals for) both a cap on pay and performance fees for fund managers," said lawmaker Sharon Bowles, referring to ebbing support for such strict limits in new EU legislation.
Bowles, who chairs the parliament's influential economic and monetary affairs committee, told Reuters that there was also little chance of winning support from EU member states for a bonus cap. Any request from parliament for such rules would require the blessing of EU governments before becoming law.
One official, who asked not to be named, said lawmakers were likely to ask instead for a deferral of part of the bonuses.
Advocates of a fund manager payout cap argue that the same culture of excess and risk pervades fund management.
The shift is a setback for Sven Giegold, a German Green member of the assembly who led calls for tighter pay controls after parliament introduced a cap on payouts to bankers.
"Twenty-four months of pay, 12 months bonus and 12 months' salary, is enough," said Giegold. "That should be the culture in all parts of the financial sector. I don't understand why this bonus culture is in the interests of investors."
Any changes to fund manager pay would hit the managers of mutual funds, which have about 6 trillion euros ($7.82 trillion) under management. A cap would not affect hedge funds or private equity, but some analysts see it as a possible precursor to rules for those investors.
($1 = 0.7671 euros)
(Editing by Susan Fenton)