FinMin: Most of EU ministers in favour of bankers' bonus cap

Brussels, March 5 (CTK) - A majority of European Union (EU) finance ministers Tuesday supported proposals for restricting bonuses to bankers, but discussion of technical details has been put off for later talks on a lower level, Czech Finance Minister Miroslav Kalousek told journalists.

Kalousek said he understood Britain's arguments against the cap on bankers' bonuses.

For the Czech Republic, however, the issue is not a "dramatic problem," Kalousek said.

"We are interested in a general compromise and we understand the argument of Britain. It does not mean that the Czech Republic is interested in particular parameters. We want to contribute to a constructive compromise," Kalousek said.

The compromise on which the European Commission, the Irish presidency of the EU and the European Parliament agreed last week restricts bankers' bonuses to the basic salary for the next year. With shareholders approval, the bonuses can be up to twice higher.

The compromise has a significant support, but it is necessary to achieve agreement on precise parameters of the bonus restriction and on the date when the agreement should take effect, Kalousek said. This will be an issue for negotiations of EU Member States' ambassadors, he added.

The final agreement should be reached in the second half of March, the ministers agreed Tuesday.

According to Kalousek, it is unrealistic for the agreement to take effect by January 1, 2014, as planned. The second half of 2014 is more probable, he said.

If no agreement is found at later talks, the compromise reached last week will take effect.

Britain objects, among other things, the fact that the bonus restriction would concern even branches of European banks outside the EU. According to Kalousek, this will hardly change, "because Europe will try to persuade the USA and Asia to take the same step."

Kalousek also said the Czech Republic is in favour of extending the maturity of loans provided to Portugal and Ireland from EU rescue funds because both countries are fulfilling the conditions of their consolidation programmes "very thoroughly."

Discussion on details of the extension will now be held by expert teams, particularly experts from the European Central Bank, the European Commission and the International Monetary Fund, Kalousek said.

The extension could theoretically lead to a situation when both countries would pay lower interests than for which they are borrowing money from the European Financial Stabilisation Mechanism (EFSM).

According to the Czech Finance Ministry, such possibility is precented by the legal act by which the EFSM was set up.

"Even though the extension of maturity of these loans would prolong the period during which the Czech Republic would have a potential obligation to the EU budget, the extension should eventually increase the probability that the loans will be repaid. This would reduce the risk that the EU budget guarantee will be activated and the Czech Republic will have to pay a sum corresponding to the unpaid loan or a part of it to the EU budget," Finance Ministry spokesman Ondrej Jakob said.