It was clear in the past that banks' payment systems needed tobe connected to creating long-term value, to performance achievedthroughout an entire business cycle, and not to next quarter'sprofit, with the view on bonuses to change in Romania, as well,bankers say.
The Supervisory Boards, which represent a bank's shareholders,decide the level of bonuses granted to top management teams.
"Bank executives received bonuses because they achieved the targetsset by the Supervisory Boards. Nobody prevented members of theboard from setting long-term targets, and from basing bonuses onthem, they were free to do it but, pressured by shareholders,analysts and investment funds, they rushed to achieve short-termresults," says Steven van Groningen, president of RaiffeisenBank.
He says the modification of bonus systems within internationalbanking groups will not have a major effect in Romania, wherebonuses were not very significant.
Rasvan Radu, chief executive of UniCredit Tiriac, says the view onbonuses will change when Romanian banks change, and that it will beincreasingly connected to the bank's performance, and even to thatof the group it is a part of.
"A bonus needs to reflect the bank's longer-term performance. Justas major profit rises and of the credit portfolio are now a thingof the past, the salary increases of the last few years are nolonger a present-day concern, either."
In the Western world, a heated debate has been going on for severalmonths now on the levels reached by bankers' earnings and on therisks of such practices continuing despite the crisis not beingover, as several large banks only survived thanks to the capitalinjections they received from governments.
Bonuses also peaked in the Romanian banking system in 2008, whenmany heads of banks were rewarded for the spectacular businessgrowth achieved in 2007, with bonuses even exceeding the annualsalary in some cases.
For instance, the entire executive management team of Raiffeisenreceived a "performance bonus" whose value was not made public,after 2007 was considered by majority shareholder RaiffeisenInternational as "the best in its 10-year history of presence onthe market," when the Romanian subsidiary posted an over 94million-euro profit.
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