European Union officials have struck a provisional deal on new financial rules, including capping bank bonuses.
Under the agreement, bonuses will be capped at a year's
salary, but can rise to two year's pay if there is explicit approval
from shareholders.
The deal was reached late on Wednesday. EU ministers must approve it, although this is considered a formality.
The UK, which hosts Europe's biggest financial services centre, was opposed to any of caps on bank bonuses.
London says saying the rules would drive away talent and restrict growth in the financial sector.
The UK had been trying to rally other governments in the 27 countries in the EU behind its position.
Top bankers and financial traders can earn bonuses multiple
times their base salaries. But there has been public outrage over
bonuses following the huge bail-outs of banks.
The agreement was reached during eight hours of intense talks
in Brussels between members of the European parliamentarians, the
European Commission and representatives of the bloc's 27 governments.
Core business
Othmar Karas, the European Parliament's chief negotiator,
said: "For the first time in the history of EU financial market
regulation, we will cap bankers' bonuses.
"The essence is that from 2014, European banks will have to
set aside more money to be more stable and concentrate on their core
business, namely financing the real economy, that of small and
medium-sized enterprises and jobs."
The deal paves the way for Basel III, an overhaul of banking rules.
The G20 group of rich nations had originally planned to bring
in Basel III last month, but that has been delayed to January 2014.
Basel III focuses on a ratio of high-quality capital - called
tier 1 - which is needed to cushion it against any future shocks. It
will rise to 9% after the rules come into effect.
Once the proposals are formally agreed it will start the
biggest shake-up of the banking system since the global financial
crisis.
The lack of solid financial cushions meant that many banks
were vulnerable, and eventually required taxpayer-funded bailouts to
avoid bankruptcy.
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