The proposed rules could be implemented as early as next year.
If a majority of a bank’s shareholders vote in favour then bonus ceiling can be raised to double their annual salary.
“For the first time in the history of EU financial market regulation, we will cap bankers’ bonuses,” said Othmar Karas, the Austrian lawmaker who helped negotiate the deal.
Britain was a lone voice in the negotiations and battled hard against most other members of the 27-nation bloc. But other nations with smaller financial services sectors refused to back down.
Ireland, which holds the rotating EU presidency and negotiated the policy, will now present the agreement to EU countries. The backing of a majority of member states is needed for the deal to be finalised.
Major British banks and industry bodies stayed quiet during the negotiations, fearing a public backlash if they spoke up in favour of large pay packets. Privately many expressed concern that London would lose out to other global financial centres such as New York and Singapore if they could not pay what they wanted to attract the best workers.
Mayor of London Boris Johnson was the only major politician to make a public stand for Britain’s financial services industry. Last week he told City A.M. that the EU “should stop butting in” on bankers’ pay and said the reforms could “undermine London’s international competitiveness”.