Sweeping new guidelines on bonuses set to be issued by banking supervisors from all 27 European Union nations will force a radical overhaul of how banks pay their top performers in an industry that claims to be suffering from regulatory overload.
Draft guidelines on how tough new rules on pay agreed by the EU this summer should be interpreted may require banks to impose a range of new limits, including capping bonus payments at a multiple of annual salary and limiting the cash component of bonuses to 20 per cent of the total amount.
Those two measures alone would mark a huge change for an industry that is based – at least in theory – on the premise of pay for performance.
But perhaps the biggest potential blow to European banks is the fact that the draft proposals would apply to senior staff and “risk-takers” across the worldwide operations of European-based organizations.
For more: FT.com / Companies / Banks - Europe’s bankers face bonus blues
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