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Big banks face pay scrutiny


Banks may be forced to tie risk-taking and lending practices to executive pay if new rules are adopted by international regulators, TheStreet.com reported.

The rules, proposed today by the Basel Committee on Banking Supervision, could affect large U.S.-based banks such as Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. that have operations falling under the international regulators’ purview.

Under the proposals, banks would disclose how they determine the size of bonuses and how those bonuses are paid — either in stock or cash. Additionally, bank boards would need to tie compensation to the type and amount of “risk taking” by management and rely on so-called deferred compensation schemes that only allow payouts based on long-term performance.

How bankers are paid has become a major focus of regulators and activist investors over the past several weeks as banks prepare themselves for handing out year-end bonuses.

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