“These disgraceful beggar-thy-neighbor plans driven by jealousy and cowardice could ironically founder on European law,” he said.
The Federation of European Employers, which represents corporate recruiters, has said that the bonus curbs would go beyond the powers given to the European Union by the bloc’s treaties.
Talks on the bank rules had dragged on for a year and a half before the Irish presidency and lawmakers negotiated the bonus agreement. The parliament had insisted that the legislation include restraints on pay to curb excessive awards and irresponsible behavior, and initially called for a ban on awards that exceed fixed pay. Yesterday’s deal cemented a tentative accord from last month that attracted criticism from Britain.
The bonus rules would apply to EU banks, including overseas units. They would also apply to EU-based units of banks from beyond the bloc’s borders.
“Hopefully we’ve seen the end of ridiculous pay packages,” Michel Barnier, the EU’s financial services chief, said in an e-mailed statement.
The European Banking Authority will work out the details of the discounting method, under yesterday’s deal. The amount of discount that is granted will depend in part of how long payment of that part of the bonus award is deferred. The discounting would only apply to securities that could be written down in a crisis.
The bonus restrictions faced opposition from the U.K. Chancellor of the Exchequer George Osborne, who said that the plan could drive up fixed salaries at banks and damage the competitiveness of the nation’s financial services industry.
Since the law won’t take effect before January 2014, it would be impossible to limit bonuses based on 2013 performance, said Vicky Ford, a fellow Tory, who sits in the EU Parliament.
The deal, which must be formally ratified by governments and the EU parliament, means that the bloc is close to settling how it should apply the Basel pact.