Flaherty warns bankers on bonuses
But won't hike tax on huge rewards
Finance Minister Jim Flaherty warned Canadian bankers Thursday they must follow new international guidelines on compensation, which require deferred payment.
Still, he said he has no plans to impose a stiffer tax on huge bonuses handed out to bank executives.
Flaherty was responding to calls by Britain and France for a new international tax on bank bonuses.
Flaherty said he will insist that Canadian bankers follow newly established guidlines set down by the G20 on compensation but he won't go so far as to create a new tax.
"We want to grow Canada as a financial centre, we don't want to impose punitive taxes on anybody," he said.
"This is not the United Kingdom, this is not the United States," he added. "We did not have to bail out banks, we did not have to nationalize banks, we did not have to use taxpayers' money to bail out banks in Canada."
Flaherty said the federal regulator, the Superintendent of Financial Institutions, is monitoring compliance with the G20 standards.
"We fully expect compliance, I don't expect we will have non-compliance," he said. "But if we do, then, through the regulator, certain steps can be taken," said Flaherty, who was not specific about what actions could be taken.
Under the G20 principles, bank executives should have a "substantial" part of their remuneration paid as a bonus that is mostly stock and is linked to individual, business-unit and firm-wide performance.
A large proportion of the bonus — 40 to 60 per cent, and higher for the most senior management — should be deferred for at least three years, permitting a possible clawback.