Irish EU presidency brokers agreement to cap bankers' bonuses
THE EU will cap banker bonuses after the European Parliament and Ireland, in its role as president of the EU, confirmed an overhaul of bank capital rules for member states.
The Basel III regulations are focused mainly on capital needs and liquidity rules for lenders, but the plans had become notorious because of a provision that caps bonuses for bank staff at 100pc of salary.
That move flies in the face of the bonus culture at investment banks in particular, where senior staff are traditionally paid a relatively modest basic wage but can earn bonuses worth millions.
Talks on Basel III had dragged on for more than a year before the Irish presidency brokered an agreement. Britain has fiercely opposed the planned bonus cap, which can be increased to 200pc of salary in certain cases.
The bonus rules would apply to EU banks, including overseas units, and EU-based units of banks from beyond the bloc.
However, at a meeting of European finance ministers earlier this month, UK Chancellor George Osborne was a lone voice against the bonus cap and Finance Minister Michael Noonan acknowledged there was little room for manoeuvre on the bonus question.
While London is the obvious target for the bonus cap, some bankers in the likes of Frankfurt and Paris are also expected to take a hit under the new rules.
Here, the Irish Banking Federation said none of its member banks had raised concerns about the bonus issue.
There is one silver lining for Britain, however. Because of the delay in agreeing the plan, the regulations are now unlikely to come into force before next year. That means it will be too late to have any effect on 2014 bonuses, which are traditionally doled out in January.