Britain fails to stop EU push on bank bonus caps
Britain failed Wednesday to convince other European Union members to alter a proposal that strictly caps bonuses bankers can receive starting next year.
Representatives of the bloc's 27 governments and the European Parliament ironed out details of the final draft of the legislation in negotiations in Brussels, officials said.
The proposal limits bonuses at one year's base salary and double that if a large majority of a bank's shareholders agrees. The rule will also apply to European units of foreign banks and the employees of EU banks working overseas.
Britain, which is home to one of the world's largest financial industries, fears the measure might drive away talent, harm the financial industry and the country's growth prospects.
Proponents of the bonus cap say the payments encouraged bankers to take massive risks at the expense of the long-term future of their businesses, which helped to destabilize the financial system and trigger the 2008-2009 financial crisis.
The bonus cap is part of a wider package of financial laws that will require all European banks to hold more capital and liquidity reserves in an effort to shield taxpayers from having to pay for more expensive bailouts.
"The most comprehensive and most far-reaching banking regulation in the history of the EU is ready for the final vote," said the European Parliament's chief negotiator, lawmaker Othmar Karas. The plenary will vote on the legislation next month, he added.
The package, implementing the internationally agreed Basel III rules on banks' capital buffers, also lays important groundwork for a single banking supervisory mechanism for the eurozone, which is a cornerstone of the 17-nation zone's effort to fight off its debt crisis.
Most EU members therefore pushed for a rapid implementation of the entire package, which they hope will take effect by January 2014.
Britain has found itself isolated in its bid to alter the bonus cap. British Prime Minister David Cameron sees Brussels as meddling too much with member states' business. He has vowed to renegotiate his country's ties with the EU and hold a referendum on Britain's membership in a few years.
Juergen Baetz can be reached on Twitter at http://www.twitter.com/jbaetz