Business, Economics and Jobs

Europe plans to cap bonus payments for bankers


Proposed bonus caps in Europe could come into effect next year.

Europe plans to impose strict curbs on bankers’ bonuses, which have been blamed for encouraging the sort of reckless risk-taking that led to the global financial crisis.

The proposed cap would limit bonuses to the level of annual salaries, or twice the annual salaries if enough shareholders agree, CNN reported Thursday.

The measure is part of a broader package of financial rules, known as the Basel III regulations, that impose higher capital requirements on banks to ensure they have enough liquidity in times of crisis, The Independent reported.

European politicians agreed on the deal Wednesday night. It now requires the support of most European Union finance ministers to become law.

The regulation could come into effect as early as next year.

The New York Times said the deal was a blow to the UK, which had opposed the cap on bonuses. Generous pay packages are part of the reason London is the largest financial center in Europe.

‘‘We need to make sure that regulation put in place in Brussels is flexible enough to allow those banks to continue competing and succeeding while being located in the UK,’’ UK Prime Minister David Cameron said was quoted as saying by The Times.

More from GlobalPost: Claw-back clauses and caps introduced into corporate bonus culture

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