Tough new rules restricting bankers' bonuses were approved by European Union lawmakers in Strasbourg yesterday and could take effect in much of the 27-country bloc in time for this winter's pay season.
Banks will be required to defer 40 to 60 per cent of bonuses for three to five years, and half of any immediate bonus must be paid in shares or in other securities linked to the bank's performance. As a result, bankers will only be able to receive between 20 to 30 per cent of any bonus in upfront cash – the toughest restriction worldwide of this kind.
While the new bonus rules are broadly in line with global recommendations endorsed by the Group of 20 leading nations, bankers and industry groups say the EU may have put itself at a competitive disadvantage by staking out such a firm position.