EU approves plans to cap City bonuses

Tim Wallace
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TENS of thousands of City workers were a step closer to having their bonuses capped by new EU rules yesterday, after the European Parliament approved the plan to ban variable pay rising above the level of salaries.

If a supermajority of shareholders approve, it can rise to twice salary.

The measures, included in a wider package of financial reforms, will now be put to the member states at the European Council (EC).

The rules are set to come into force in January 2014, affecting the bonus season at the start of 2015. Senior managers and traders from 2,700 UK firms will be hit by the rules.

Britain is thought to be opposed to the plan as it undoes much of the work toward long-term incentives that has added more clawbacks and share payments into the system.

But the government also fears a backlash if it appears to defend high-paid financiers.

Other measures approved yesterday will bring in higher capital requirements for banks, as well as letting national regulators raise buffers further if they wish.

Banks will also be forced to publish earnings, tax payments, subsidy receipts, turnover and employment in every country in which they operate. MEPs want the EC to receive the figures in 2014 and the public to see them from 2015.