EU law proposes sanctions for risky bank bonuses

BRUSSELS, July 13 (Reuters) - Regulators will have powers to sanction banks in the European Union whose pay policies encourage too much risk-taking, under a draft law published by the bloc's executive body on Monday.

The European Commission's draft law updates EU rules on bank capital requirements to apply lessons from the worst financial crisis since the 1930s.

The draft, which requires adoption by the European Parliament and EU governments to become law, also proposes to tighten capital requirements on risky assets held by banks on their trading books, the Commission said in a statement.

A bank would have to improve disclosure of its holdings in securitised products, which were at the heart of the credit crunch.

There will also be higher capital requirements for re-securitisations to reflect better the risks they contain, the Commission said. (Writing by Huw Jones; Editing by Dale Hudson)