EU lawmakers have insisted that the EU legislation to implement Basel III include curbs on variable pay as part of a quest to reshape lenders as utilities rather than money-making machines.
Members of the assembly’s economic and monetary affairs committee called last year for an outright ban on bonuses that exceed fixed pay.
“Imposing a cap on the ratio of variable to fixed pay runs a high risk of increasing fixed salaries,” Isabel Pooley, a lawyer at CMS Cameron McKenna, said in an e-mailed statement.
Governments sought to reopen a draft deal reached in December by the assembly and Cyprus, which then held the EU presidency, to cap banker bonuses at twice fixed pay. Under that proposal, bonuses exceeding fixed salary would be allowed only if the majority of a bank’s shareholders voted in favor.
Several nations, including the U.K., opposed that plan at a meeting last week. The British proposal included retaining existing EU rules that require some portion of bonus awards to be deferred and ensuring that payouts can be clawed back, according to officials.