* Diplomats examine new rules on banker pay in EU
* Bonuses could be capped at salary level, under plan
* With shareholders' agreement could be twice salary
By John O'Donnell
BRUSSELS, Feb 11 Bankers' bonuses could be
capped under plans examined by EU countries this week, as
politicians attempt to placate public anger and tighten controls
over an industry blamed for its role in a global financial
The proposals, part of a drive to implement so-called Basel
III rules aimed at preventing a repeat of the 2007-09 crisis,
would cap banker bonuses at the level of their salaries to stop
huge payouts from encouraging excessive risk-taking.
However, bigger bonuses - up to twice the banker's salary -
would be possible if shareholders agreed, according to an
internal document obtained by Reuters.
The issue has been gathering momentum across Europe and the
United States since U.S. mortgage debt triggered the bursting of
a global credit bubble more than five years ago, leading social
activists and many investors to challenge the
multi-million-dollar packages awarded to bankers and business
The proposals are outlined in a report, prepared by
diplomats from Ireland, which holds the rotating EU presidency.
If agreed, the plan would see an unprecedented tightening of
EU law to curb banker pay as soon as the beginning of next year.
It would be the first such absolute cap on pay in Europe.
Earlier reforms have forced bankers to wait longer for bonuses
to prevent them taking excessive risks to bolster their pay.
For such a change to happen, however, countries such as
Britain would first have to be convinced. Britain, home to the
region's biggest financial centre, London, has argued against a
cap but accepts shareholders should have more say in banker pay.
Irish diplomats will outline the plans at a meeting of
member state ambassadors on Thursday, as they attempt to strike
a compromise between demands for pay curbs of the European
Parliament and the desire for a more gentle tack among some EU
In the report obtained by Reuters, dated February 8,
officials write that they wish to test countries' willingness to
compromise with the European Parliament.
The Basel III rules, part of a drive by regulators across
the world, would also force the European Union's 8,000 banks to
triple the amount of capital they hold compared with before the
crisis, in the hope that would make them strong enough to cope
with market shocks without the need for a repeat of
The implementation of the rules in Europe had originally
been planned for the start of this year, but it has now been
postponed to January 1, 2014 and could take longer still if
countries are not ready.
The delay means banks and investors are left in the dark for
longer about the exact impact of new rules on future
profitability as actual laws are likely to diverge in some
respects from the Basel accord.