VZCZCXRO6519
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHBS #0472 0911341
ZNR UUUUU ZZH
R 011341Z APR 09
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 8786
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS BRUSSELS 000472 
 
SENSITIVE 
 
NOFORN 
 
SIPDIS 
 
STATE FOR EB/IFD, EUR/ERA AND EUR/UBI 
Treasury for OASIA/OIN - Atukorala 
USDOC FOR 3133/USFCS/OIO/EUR 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ELAB BE
SUBJECT: Belgium: Financial Sector Bonuses Shrouded in Silence 
 
¶1.  (SBU) SUMMARY: While most countries in Western Europe are 
vigorously debating the pros and cons of large banking bonuses, no 
such discussion has been taking place in Belgium.  The involvement 
of quasi-public banks Dexia and Ethias is one reason why politicians 
have treaded delicately until now; both banks have traditionally 
been considered outplacement offices for politicians near the end of 
their careers.  But the lack of much of an outcry - political or 
public - is also because large bonuses are quite uncommon in the 
Belgian banking system, where most people favor fixed over variable 
salary arrangements.  A high bonus for a top manager of Fortis Bank 
appears to be more the exception.  Finally, in the small world of 
Belgian finance, many lips are sealed - few financiers care to talk 
on a sensitive issue at a sensitive time.  End summary. 
 
¶2.  (SBU) While the severance payments of several top Fortis 
managers certainly drew some criticism mainly from the  socialists 
in the Belgian parliament in recent months, neither political nor 
public anger ever reached the levels witnessed in other countries. 
Former Prime Minister Leterme did intervene to reduce the 5 million 
euro golden handshake of former Fortis CEO Verwilst to 800,000 
euros, but the Government had to admit defeat after failing to block 
the 4 million euros netted by Fortis Chief Financial Officer 
Mittler.  And when Fortis management approved the bonuses of 2,000 
employees just hours before the takeover by BNP Paribas, the 
decision hardly made the headlines. 
 
¶3.  (SBU) Although 20 billion euros in taxpayers' money went into 
the rescue of Fortis, Dexia, Ethias and KBC, it was only in the case 
of KBC that the Flemish regional government enforced limits to 
bankers' bonuses.  The federal government never discussed the issue, 
and even some members of the opposition termed bonus criticism 'a 
higher form of populism'.  For a variety of (mainly fiscal) reasons, 
Belgians traditionally are very discreet about personal income 
issues, and general believe  that people who live in glass houses 
should not throw stones - no one wants to rock the boat.  To date, 
most of the Belgian banks have refused to comment about their bonus 
system.  The propensity for politicians at least to stay quiet is 
furthermore compounded by the fact that not only Dexia and Ethias 
but also Fortis and KBC will now even more than ever have 
politically appointed board members, given Belgian and regional 
government assistance.  No Belgian politician wants to shoot himself 
or herself in the foot on this potentially lucrative issue. 
 
¶4.  (SBU) According to labor market specialist Jan Denys of 
Randstad, Belgians largely prefer fixed over variable salary 
arrangements, and as a result, large banking bonuses as witnessed 
abroad are quite uncommon in Belgium.  The salary of three quarters 
of the banking personnel is governed by collective wage agreements 
negotiated between the trade unions and the employers.  As a 
consequence, only banking top management is rewarded with a bonus, 
without - as far as we know --ever reaching the levels witnessed 
abroad. 
 
Bush