FSA publishes new code on bank bonuses

The new code on awarding bank bonuses is closely aligned to European Union rules agreed last week and will apply to 2,700 financial firms in the UK, the Financial Services Authority (FSA) has said.

The code outlines four tiers of firms, saying that those in tiers three and four – small banks and building societies, and firms that do not put their balance sheets at risk – may be exempt from many of the stricter rules set out by the EU's Committee of European Banking Supervisors (CEBS) last week.

"The most significant of these are the requirement to have a UK-based remuneration committee, deferral, and the proportion of variable remuneration paid in shares. For other rules, the FSA will apply a discretionary approach that is likely to result in less-onerous requirements," the FSA said.