EU countries to discuss caps on banker bonuses

Sun Nov 11, 2012 12:38pm EST
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By John O'Donnell

BRUSSELS (Reuters) - European Union countries will consider a proposal this week for an absolute cap on the total bonus paid to bankers, EU officials said on Sunday, a reform Britain is unlikely to support.

The idea to cap total bonus payouts, including share options, at between three and five times salary, will be discussed at a meeting of EU diplomats and lawmakers on Monday alongside a suggestion to limit just the cash bonus bankers receive to the level of their salary, one of the officials said.

A cap would represent the most radical clamp down yet on banker pay in Europe. It would, however, be politically difficult to push through such a reform if Britain, as expected, objects.

Its finance minister, George Osborne, who wants to protect London's position as Europe's top financial centre, has said he would fight any bonus caps from Brussels.

Policymakers worldwide have made little progress in limiting pay for an industry that caused a financial crisis in 2008, forcing bank bailouts by taxpayers.

An automatic cap of three times salary would be applied under the proposal to be discussed on Monday although a bank's owners could loosen this limit. "Shareholders could decide to go for five times," said the official.

A second official said: "There should be a final push so that there is a political agreement at the meeting of finance ministers on December 4," adding that changes to any cap were still possible.

The proposal is being tabled by officials from Cyprus, who hold the rotating presidency of the European Union and are leading preparations ahead of a meeting of the bloc's finance ministers on Tuesday.   Continued...