(Bloomberg) -- Dutch lawmakers have introduced a law that tightens restrictions around banker bonuses, as the country's unease about pay packages for financiers persists more than a decade after the global financial crisis.
The new law requires shares received as part of compensation to be kept for at least five years before they can be sold, according to the legislation which was adopted in Dutch parliament on Thursday and is specifically targeted on the financial sector. Firms also have to disclose how “the remuneration within the company relates to the position of the company in the sector and its position in society.”
Since the financial crisis, the Netherlands has been tightening its bonus regulation for the financial sector on top of existing European rules. In 2012 the Dutch introduced a ban on paying variable remuneration to directors of financial companies that benefited from state aid like ABN AMRO Bank NV and ING Groep NV. In 2015, a 20% cap was placed on banker bonuses.
The new regulation aims to “contribute to financial stability, a culture change in the sector and to confidence in the sector,” the Finance Ministry said in a statement.
The Dutch Banking Association criticized the move, saying it would prevent the industry from competing with European rivals. “We are not in favor of this regulation because national regulation on top of European regulation interferes with a level playing field for all banks in the EU,” a spokesperson said.
The requirement to disclose a written statement is a tool to make financial companies demonstrate “accountability” to the public, said Roderik Boogaard, a lawyer specialized in financial law at Loyens & Loeff. The ban on selling shares within five years of receipt is in response to an outcry over a 2018 package received by former ING Chief Executive Officer Ralph Hamers, which would have seen his pay rise by 50% before it was scrapped, he said.
After the U.K. voted to the leave the European Union, Loyens & Loeff received several requests from financial companies to examine the possibility of relocating to the Netherlands. Most dropped the idea after hearing about the bonus cap, Boogaard said.
“The Netherlands is the only country to have such a cap,” he says. “We missed out on several banks because of this regulation.”
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