EU Bonus Cap Could Hit 10 Times as Many London Bankers -PwC
Tougher European Union curbs on bonuses will snare far more bankers than current pay limits, with banks having little time to prepare for the change, consultancy PwC said on Friday.
The European Banking Authority has approved a draft paper to cap the bonus of any bank employee whose total remuneration is more than 500,000 euros, PwC said in a statement.
(Read More: European Union Set to Widen Bonus Clampdown)
The EU watchdog's board met on Thursday and a spokeswoman declined to comment before the paper is released early next week for public consultation.
Jon Terry, a partner at PwC, said the 500,000 euro threshold would increase the number of staff subject to bonus capping perhaps by as much as 10 times for some investment banks operating in London in comparison with current UK rules.
"This will create a major challenge for banks as to how they reward their staff. Bringing more people into the stringent pay rules again further widens the gap between pay practices in Europe and the rest of the world," Terry said.
(Read More: Barclays on Bonus Caps: We Don't Need Rules)
The European Union is looking at several ways to make banks pay for the billions in help they have received from governments and central banks to stay afloat in the financial crisis, including a possible tax on financial transactions being considered by 11 member states.
In March the EU approved a new law barring bankers from awarding themselves payouts worth more than their salary, by far the world's most stringent curb on financial sector pay
(Read More: Isolated Britain Fails to Avert EU Bank Bonus Cap).
The moves are in response to public anger at big bonuses at lenders rescued by taxpayers and as part of broader efforts to dampen excessive risk taking.
The EBS is now fleshing out the law by setting out a pan-EU definition of who should be subject to the bonus cap. Currently there is no common definition of who must comply with the bloc's existing remuneration curbs.