LONDON May 17 Tougher European Union curbs on
bonuses will snare far more bankers than current pay limits,
with banks having little time to prepare for the change,
consultancy PwC said on Friday.
The European Banking Authority has approved a draft paper to
cap the bonus of any bank employee whose total remuneration is
more than 500,000 euros, PwC said in a statement.
The EU watchdog's board met on Thursday and a spokeswoman
declined to comment before the paper is released early next week
for public consultation.
Jon Terry, a partner at PwC, said the 500,000 euro threshold
would increase the number of staff subject to bonus capping
perhaps by as much as 10 times for some investment banks
operating in London in comparison with current UK rules.
"This will create a major challenge for banks as to how they
reward their staff. Bringing more people into the stringent pay
rules again further widens the gap between pay practices in
Europe and the rest of the world," Terry said.
The European Union is looking at several ways to make banks
pay for the billions in help they have received from governments
and central banks to stay afloat in the financial crisis,
including a possible tax on financial transactions being
considered by 11 member states.
In March the EU approved a new law barring bankers from
awarding themselves payouts worth more than their salary, by far
the world's most stringent curb on financial sector pay.
The moves are in response to public anger at big bonuses at
lenders rescued by taxpayers and as part of broader efforts to
dampen excessive risk taking.
The EBS is now fleshing out the law by setting out a pan-EU
definition of who should be subject to the bonus cap. Currently
there is no common definition of who must comply with the bloc's
existing remuneration curbs.