Bankers in Europe face a cap on bonuses as early as next year, following agreement in Brussels yesterday to introduce what would be the world’s strictest pay curbs, in a move that politicians hope will address public anger at financial sector greed.

The provisional agreement, announced by diplomats and officials after late-night talks between EU country representatives and the bloc’s Parliament, means bankers face an automatic bonus cap set at a par with their salaries.

That can be raised to twice their pay packet only if a majority of the bank’s shareholders vote in favour.

The rules will apply to all banks – American, Asian, Russian and European – based in Europe, and to units of European banks located abroad, so a Deutsche Bank employee working in New York or Tokyo would be subject to the same limits.

Equally, a Goldman Sachs banker in London, Frankfurt or anywhere else in the EU would be covered.

“There will be no exceptions,” said Othmar Karas, the Austrian lawmaker who helped negotiate the deal. “It goes for all banks inside and outside the EU and for all foreign banks inside the EU.”

The cap has been somewhat softened by pro-visions for adjusting the value of long-term non-cash payments to bankers, so that more bonuses can be paid out over time without breaking through the new ceiling.

The limit on bankers’ pay, which is set to enter EU law as part of a wider overhaul of capital rules aimed at making banks more stable, will be popular on a continent struggling to emerge from the ruins of the 2008 financial crisis.

But it represents a setback for the British Government, which had long argued against such absolute limits. The City of London, the region’s financial capital with 144,000 banking staff and many more in related jobs, will be hit hardest.

“The UK is not happy,” said one lawmaker, speaking privately. Ireland, which holds the rotating EU presidency and helped negotiate the deal, will now present it to EU countries. Irish Finance Minister Michael Noonan said he would ask his peers to back it at an EU ministers’ meeting on Tuesday in Brussels.

The backing of a majority of EU states is needed for the deal to be finalised, so Britain would not be able to block it alone. One member of the European Parliament privately signalled that the deal could yet change, pointing to the “reservations” of some EU countries.

Other measures in the package, including moves to force banks to declare all core assets, remain unresolved. Yesterday’s agreement will also require banks to outline profits and other details of their operations on a country-by-country basis, and they face a 2019 deadline to raise their core capital levels.

The change in the law is set to be introduced as part of a wider body of legislation, known as Basel III, which demands that banks set aside roughly three times more capital and build up cash buffers to cover the risk of unpaid loans.

Some experts have criticised the EU for failing to stick to all the provisions set out in the Basel III agreement, which was drawn up by regulators after the financial crash.

A ceiling on bonuses, the only one of its kind globally, is perhaps the most radical aspect of the new rules, and runs the risk of establishing an uneven global playing field that could put European banks at a disadvantage in attracting staff.

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