BRUSSELS (REUTERS) - Bankers in Europe will have one final bonus season before they are barred from awarding themselves payouts worth more than their salary, European Union lawmakers agreed on Wednesday, paving the way for the first cap of its kind globally.
The cap is designed to address public anger at a bonus-driven culture many European politicians believe encouraged the risk-taking that led to the near-collapse of some of the region's biggest banks.
The law will take effect in January next year but will only apply to bonuses paid in 2015. A special provision to recognise that bonuses are paid for the previous year's work means bankers who collect payouts next February and March will not yet be affected.
The new rules will make it harder to award large payouts such as the bonus worth more than 17 million pounds (S$32.5 million) cashed in this week by Mr Rich Ricci, the head of Barclays' investment bank.
"The Parliament withstood the pressure from the British government and did not allow any change to the cap on bonus payments," said Mr Udo Bullmann, a German member of Parliament who pushed for strict limits. "Despite bitter resistance from national capitals and the finance industry, Europe will be a little bit fairer from 2014."
The bonus talks have been emotional and divisive. Some lawmakers, thinking ahead to pan-European elections next year, demanded stricter rules while others tried to dilute them.
One angry British lawmaker walked out of the talks on Wednesday, but later parliamentarians applauded and toasted the deal with champagne.
The rules, part of a wider capital regime for banks, allow bonuses of twice bankers' salary if shareholders agree. They represent the toughest bonus regime anywhere in the world. The cap has been softened to allow banks to pay up to a quarter of a banker's bonus in share options, bonds or other non-cash payments which attract a premium after five years.
Payments made after more than five years would qualify for a bigger discount when calculating the size of the bonus, to make the total payment slightly more generous than foreseen by the cap.
The cap will be introduced despite objections from Britain and the next step, an endorsement by EU states, is a formality.
Earlier this year, Britain's finance minister George Osborne tried to change the rules at a meeting with his EU counterparts, but no one supported him. Britain could not veto the rules on its own.