EU considers limiting bank bonuses to basic salary
Published 10/11/2012 | 05:00
THE European Union is to consider limits that would keep bankers' cash bonuses at the same level as basic salaries, EU officials said.
It is seen as an attempt to sway Britain's resistance to a further clampdown on the pay packets.
Most Irish banks have been barred from paying bonuses since they took State cash under their bailout deals. The new rules would go further, applying to all banks.
The proposals were first aired by Germany in August and are due now to be discussed by EU member states and lawmakers from the European Parliament.
Policymakers have made little progress in limiting huge payouts for an industry that drove the world economy into crisis in 2008 and forced taxpayer-funded bailouts.
The EU has tougher bank pay curbs than the Group of 20 guidelines lay out, but some policymakers are still pushing for more steps to be taken.
It will be the first time member states have formally discussed the bonus proposal which will pit German interests against those of Britain.
Britain's finance minister George Osborne, mindful of London's status as a financial centre, has previously said he would fight any new bonus caps from Brussels.
Banks have also lobbied against the change, saying the cap could strip them of talent. Current rules already force banks to defer up to half the bonus for at least three years.
Lawmakers said any compromise must take into account previously agreed rules, such as clawing back a bonus if a bank gets into trouble. Some critics have already pointed to moves by banks to up basic salaries, which would weaken the impact of the new rules from the off. (Reuters)