Bankers hope to water down EU bonus cap

The EU approved a law to cap bonuses at no more than fixed salary, rising to twice the salary if shareholders give their approval.

The new law is in response to public anger at the size of bonuses, especially at banks that had to be rescued by taxpayers’ money at a time of general austerity in Europe.

The European Banking Authority (EBA) said yesterday that two consultations on the implementation of the law will be published this year, determining the impact it will have on the sector.

The first will be on binding rules that define who is a ‘risk taker’ at a bank and therefore subject to the bonus cap.

The second will set out guidelines for national regulators on how to treat non-cash payments included in a banker’s remuneration package.

Regulators in EU states currently use their own definitions of ‘risk takers’, but the aim is to come up with a common interpretation, the EBA said.

After failing to stop the EU from agreeing to a cap, bankers are now hoping to water it down in practice.

“The current definition of risk taker in Britain is rather wide and not only captures traders and senior staff, but also second-tier staff,” said one banking industry official.