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| EU agrees bank bonuses limit deal | EU agrees bank bonuses limit deal |
| (40 minutes later) | |
| EU commissioner Olli Rehn announced the deal | EU commissioner Olli Rehn announced the deal |
| The European Union has agreed a deal to limit the proportion of bankers' bonuses that can be paid upfront. | |
| Under the draft rules, most banking executives will receive no more than 30% of their bonus immediately and in cash, or 20% for larger bonuses. | Under the draft rules, most banking executives will receive no more than 30% of their bonus immediately and in cash, or 20% for larger bonuses. |
| The rest will be delayed and paid out depending on long-term performance, the deal between EU governments and the European parliament said. | The rest will be delayed and paid out depending on long-term performance, the deal between EU governments and the European parliament said. |
| At least 50% of that bonus will have to be paid in shares, not cash. | |
| The EU also wants to see bonuses more closely linked to salaries, and large severance packages for departing executives will also be limited. | |
| The draft rules will be put to vote at the European Parliament next week, but are likely to become law following this agreement. | The draft rules will be put to vote at the European Parliament next week, but are likely to become law following this agreement. |
| The rules will then come into law across Europe at the beginning of 2011. | The rules will then come into law across Europe at the beginning of 2011. |
| "These tough new rules on bonuses will transform the bonus culture and end incentives for excessive risk taking," said Arlene McCarthy, one MEP involved in negotiating the deal. | |
| The limits will apply to all 27 EU member states, although similar rules are already in place in countries including the UK. | |
| Politicians have been keen to act on bankers' bonuses since the financial crisis erupted in 2008. | |
| The rules do not limit the size of bonuses that can be paid to bankers, only the proportions that must be paid in cash and shares, and the timing of those payments. | |
| But the BBC's business editor Robert Peston says that the rules cover hedge funds as well - the first time the pay of hedge fund managers in the City of London will have been regulated. | |
| "The new rules won't make a big difference to bankers based in London," he said. | |
| "The Financial Services Authority has already imposed conditions on them which many bankers would see as tougher. | |
| "But the rules will have a big impact on hedge funds and other asset management firms." | |
| Our business editor warned that this could lead to some hedge funds moving to non-EU financial centres, such as Switzerland, to avoid the pay restrictions. |