The European Parliament today approved tougher curbs on bank bonuses as part of wider efforts to limit risk in a sector shored up by taxpayers.
EU finance ministers are set to endorse the new law next Tuesday with the curbs taking effect from the start of next year so that only 30 per cent of a bonus can be paid up front, with the rest deferred by up to five years.
The EU assembly voted by 625 in favour of the new law with 28 against and 37 abstentions.
"It's good news. From January 1st, the bonuses of bankers will be curbed," French Green Party member Pascal Canfin said.
Austrian centre right lawmaker Othmar Karas said: "We want to make sure that bonus payments don't support risk taking but dampen it." The new rules also force banks to set aside more capital against repackaged securities held on their trading books.
The aim is to learn from the financial crisis when the value of securities linked to defaulting home loans crashed, forcing governments to step in with rescue packages.
Reuters