EU regulators confirmed yesterday that they will cap bonuses of bankers earning more than €500,000 a year and added other conditions to make the pay ceiling harder to smash.

PwC predicted that the number of London bankers affected will be 10 times the number hit by current pay curbs

The headline figure was leaked last Friday, triggering warnings by banks in the European Union that they may lose staff to other parts of the world, and that London, the bloc’s top financial centre, could be damaged.

Accounting firm PwC predicted that the number of London bankers affected will be 10 times the number hit by current pay curbs.

The European Banking Authority (EBA) said the purpose of the draft rules, out for public consultation until August 21, is to have a common definition for national regulators within the EU to decide which bankers will come within the pay curb net.

The EBA is fleshing out a new EU law that includes the bonus cap, which lawmakers say is needed to crack down on excessive risk-taking at banks. The cap will hit bonuses awarded for 2014 and due to be handed out in early 2015.

The EU already applies a tougher version of bank pay limits agreed by world leaders during the financial crisis and the cap will be the toughest curb of its kind in the world.

Based on data from 23 banks, the EBA said that the new rules would capture 4,796 staff when the €500,000 threshold is applied, compared with 1,792 staff affected by current remuneration curbs.

The average total pay of risk-takers in 2011 was €508,000, based on data from 110 banks, the EBA said.

Lawyers said the EBA's criteria will bring far more bankers within the regulatory net than existing curbs that are limited to deferring parts of a bonus over several years.

'It will have a disproportionate effect on London compared with other European centres, which have smaller numbers of people earning at this level, and will further handicap London's ability to compete for talent on the world stage,' said Stefan Martin, an employment lawyer at Allen & Overy.

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