Bank bonus cap rules get EU nod

The European Parliament today voted through a new package of rules designed to make banks safer, more accountable and help them to focus on lending to the economy.

A cap will mean bonuses cannot be larger than salary, or can be as much as twice salary if agreed by shareholders.

“It has been the failure of banks to self regulate on bonuses or to exercise restraint that has resulted today’s vote,” said Euro MP David Martin.

“This aims to put an end to the excessive risk culture which led to taxpayer bail-outs and bank collapses.”

In 2010 the EU put in place rules ensuring bonuses were deferred and could be clawed back, and also that cash bonuses were limited, he said. “The banks were told to introduce a ratio between fixed salary and bonus elements. The banks’ failure to put their own house in order has resulted in these tough new rules.”