Istanbul - Deutsche Bank Chairman Josef Ackermann said Saturday that he expects banks to reduce bonuses paid to executives, which critics say sparked the global financial crisis, and align their salaries more closely with performance in future. Ackermann, who also chairs the international banking lobby known as the International Institute of Finance (IIF), said he welcomed calls by world leaders at the Group of 20 (G20) summit last month to place new standards on the compensation practices of banks.
"We have to move away from revenue-based compensation," Ackerman said, adding that he believed banks were beginning to ask whether their salaries were "socially and politically acceptable."
Ackermann said he opposed multi-year bonuses. A so-called "clawback" option, which would allow governments to retrieve bonuses if they are forced to bail-out a bank, was also "a good thing."
The financial crisis, which began with the collapse of Lehman Brothers in September 2008, forced dozens of banks to be rescued by governments in the United States and Europe. Continuing bonus pay-outs to executives, even as banks were faltering, sparked mass public outrage.
World leaders also argue banks must alter compensation practices that encouraged investors to take the kind of risks that helped sparked the financial crisis.
But financial firms have resisted some of the tougher regulatory curbs suggested by politicians. The IIF has rejected the idea of a hard cap on compensation and Ackermann said banks should still be expected to pay salaries "based on what the market requires."
Ackermann also acknowledged the IIF had no way of enforcing its new "principles" for reducing bonuses on its 375 member banks.
"We have our principles. We ask all our members to adhere to it," Ackermann said. "We can't do more than that."
