EU lawmakers to press Barnier on scope of bonus cap rule

Mon Mar 10, 2014 4:45pm EDT
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By Huw Jones

LONDON (Reuters) - European Union rules to cap bankers' bonuses were in doubt on Monday after the bloc's lawmakers agreed to consider a revamp to stop Britain's banks softening their impact.

The cap is one of the most high-profile rules from the 28-country bloc after public anger over high pay at banks, many of which were propped up by taxpayers in the 2007-09 financial crisis.

The rule limits a bonus to no more than the fixed salary, or twice that level if approved by the bank's shareholders, and will affect 2014 awards to be handed out early next year.

Udo Bullmann, a German center-left member of the European Parliament's economic affairs committee, questioned how the European Banking Authority has fleshed out the rules, saying their scope was narrower than the lawmakers had wanted.

It would only affect a selective number of bankers, Bullmann told a committee meeting in Strasbourg, France. The EBA scaled back its initial draft to hit fewer bankers.

The European Commission and the EBA could quickly tweak the rules to avoid a prolonged delay, and the committee will put their concerns to the bloc's financial services Commissioner, Michel Barnier, when they quiz him next week, Bullmann said.

Britain's HSBC has said it will give new "allowances" - expected to take the form of monthly or quarterly payments in cash or shares - to senior staff to boost their fixed pay, meaning that higher bonuses could then be awarded. UK peers Lloyds and Barclays last week indicated they would follow suit.

"What's going on in the UK? There is a lot that's happening that is not in line with the political decisions that have been taken here," said Othmar Karas, an Austrian center right committee member.   Continued...

European Commissioner for Internal Market and Services Michel Barnier holds a news conference on the restructuring of the bank at the European Commission headquarters in Brussels January 29, 2014. REUTERS/Laurent Dubrule