April 1, 2014 / 3:16 PM / in 4 years

EU lawmakers back down from challenge to banker bonus cap

LONDON, April 1 (Reuters) - The European Parliament won’t delay a cap on bankers’ bonuses despite moves by banks in Britain to soften its impact, senior lawmakers said on Tuesday.

The parliament is concerned that lenders are trying to circumvent the cap, such as by paying “allowances”, to bump up a banker’s fixed pay.

Under the EU rule, which will apply to awards handed out from early 2015, a bonus can be no higher than fixed pay, or twice that level with shareholder approval.

Three members of the parliament’s economic affairs committee, Othmar Karas, Udo Bullmann and Philippe Lamberts, said they will not hold up the new rule after the bloc’s financial services chief Michel Barnier gave them reassurances.

They were worried that exemptions for those earning 500,000 euros or more - an employee’s salary threshold for the cap to apply - could be too easily obtained.

“Commissioner Barnier agreed to issue a statement clarifying that even total remuneration below 750,000 euro threshold requires notification of the competent authority in advance of application,” the three lawmakers said.

“In any case, the competent authority must intervene if it considers the remuneration unjustified or doubtful. For this reason, we agreed in the end not to object to the regulatory technical standard, as a thorough application of the standard should cover the risk-takers whose bonuses we want to cap.”

Reporting by Huw Jones, editing by Kirstin Ridley

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