11 Dec 2010

Bank bonus restrictions set by EU

5:00 pm on 11 December 2010

Regulators in Europe have set tough restrictions on the bonuses that banks can pay their employees.

New guidelines announced by the Committee of European Banking Supervisors say only 20% - 30% of bonuses can be paid in upfront cash.

The BBC reports the rules are much tougher than those agreed by the G20 countries, raising fears that European bankers may emigrate to more lightly regulated countries in Asia.

The bonus limits will apply to the entire global staff of European banks.

However, non-European banks will face restrictions only on what they pay people working for subsidiaries based in the European Economic Area.

Some European banks have warned that the rules create an added incentive for their employees to relocate to Asian cities such as Singapore that have looser bonus rules, as well as lower tax rates and access to Asia's booming economies.

The BBC reports the rules will not apply to Switzerland, which is not part of the European Economic Area.