The European Parliament has approved a package of reforms to strengthen European banks. The most extensive bank regulation at the EU level will touch all 8,200 banks operating in the EU territory and apply from the beginning of 2014. One of the most significant changes within the package concerns limiting the amount of bankers' bonuses.
Bankers' bonuses will be limited to their basic annual salary. They will be able to achieve a maximum of twice the basic salary if so agreed by a majority of shareholders. At least 25% of any bonus exceeding 100% of a banker's salary will be deferred for at least five years.
This most stringent restriction of bankers' bonuses in the world is the result of public dissatisfaction with the level of financial remuneration of bankers during the economic crisis. It focuses primarily on the remuneration of the top management of banks to avoid speculative risk-taking.
The package must be formally approved by the Council of the European Union the majority of which has, however, previously expressed its consent. UK has been the biggest opponent of the new measures trying to protect the financial center of London - City - against the regulation.
-kk-