Our reporter Chris Harlow:
The European Union’s bonus cap came a step closer to reality yesterday with the release of the first reading of the new capital requirements directive.
The document says that the EU will be capping bonuses at 100 per cent of salary, unless two thirds of investors vote to allow it to be increased to 200 per cent.
A quarter of this 200 per cent can be paid in discounted long-term instruments that must be deferred for at least five years. The discount rate is yet to be determined, but could potentially allow bonuses to increase above the 1:2 fixed to variable pay ratio.