He proposes that a cap on total remuneration for investment bankers in proportion to an investment bank’s risk-weighted assets is the best way to tackle the issue of bankers’ bonuses while delivering financial stability.
The European Banking Authority’s (EBA) decision to declare that almost all ‘role-based remuneration’ are essentially bonuses has caused consternation and Professor Thanassoulis argues it is too blunt an instrument which will make banks less financially stable.
Professor Thanassoulis said: