EU to close deal on bank bonus clampdown
Rules may not come into force until mid-2014 to allow time for legal preparations
European Union lawmakers are expected to agree today to bar bankers in Europe from getting bonuses bigger than their salary. Photograph: Simon Dawson/Bloomberg.
European Union lawmakers are expected to agree today to bar bankers in Europe from getting bonuses bigger than their salary, with just the timing of the first cap of its kind globally to be decided.
EU officials indicated that there could be a further delay to the introduction of the new rules until as late as the middle of 2014 to allow countries time to complete legal preparations - which could spare bankers for one more bonus season.
But apart from the exact timing, little else remains to be decided before one of the most ambitious reforms of the financial crisis can be introduced.
The cap, which would be rubber-stamped by EU member states, is designed to address public anger at a bonus-driven culture many European politicians believe encouraged the risk-taking that led to the near-collapse of many of the region's biggest banks.
It will be introduced despite objections from Britain. While some token concessions are possible to show goodwill towards the bloc's financial hub of London, the decision on a cap will not be reversed.
Members of the European Parliament and diplomats representing EU countries are to begin talks on finalising the bonus rules at 5.30pm.
Sharon Bowles, who as chairwoman of the parliament's economic and monetary affairs committee is central to negotiations, said she expected a deal to be clinched.
The British politician played down any threat to London. "The mass exodus from the City of London by disgruntled bankers demanding the astronomical bonuses of yesterday remains to be seen and I am sure fair-mindedness will prevail," she said.
"Today's agreement on a bankers' bonus cap will usher in a much needed culture change, not just for the City of London, but for the rest of Europe too."
Nonetheless the development marks a significant political setback for Britain. Earlier this month, chancellor George Osborne tried to change the rules at a meeting with his EU counterparts, but no one supported him.
His inability to fend off the reform underscored Britain's waning influence in the EU and is also likely to fuel deepening euro scepticism in Britain.
The rules, part of a wider capital regime for banks, would limit banker bonuses to the equivalent of their salary, or two times their salary if shareholders agree. They represent the toughest bonus regime anywhere in the world.
They threaten Britain's financial industry the most, raising the risk that some banks and their top bankers could relocate to other financial centres outside the European Union.