BNP Paribas Compensation: A Model to follow?

BNP states that is will reduce its compensation-to-income ratio to 27 per cent for FY 2009. In doing so management claims to address public (political) concerns over excessive pay. BNP certainly seems to navigate successfully through the twin challenges of keeping regulators sweet and running the business smoothly while competitors stumble over PR gaffes or management mistakes. However, we do have a sneaking suspicion that pressure on compensation levels in the large investment banks will contribute to a revival of smaller competitors that are not in the limelight and are less subject to regulatory fervor.