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London - The European Union's banking regulator is planning to clamp down next month on banks whose pay policies are designed to sidestep the EU's incoming bonus cap, the Financial Times (FT) reported, citing sources.
The European Banking Authority (EBA), which has been investigating banks' allowances, is poised to take a much stricter stance than British regulators on what can count as fixed pay, the FT said, citing two sources familiar with the EBA draft recommendations.
The paper said, citing the draft, that fixed allowances would be expected to be assigned to specific positions rather than individuals, meaning bankers or traders with the same role should receive the same allowance, regardless of individual performance.
To be excluded from the EU bonus rule, allowances would be awarded for a set period, include no forfeiture provisions if a person hands in their notice, and be impossible to adjust mid-term without staff consent, the FT reported.
The EBA could not be reached for comment outside regular business hours.
The EU's bonus cap is one of the most high-profile rules approved by the 28-country bloc following public anger over high pay at banks, many of which were propped up by taxpayers in the wake of the 2008 financial crisis.
The rule limits banks to no more than an employee's fixed salary, or twice that level if approved by the bank's shareholders, and will affect 2014 awards to be handed out early next year.
Should the draft be adopted and enforced by British regulators, banks would be forced to reevaluate where their employees stand when in comes to bonuses for the 2014 performance year.
The bloc's Financial Services chief Michel Barnier warned in March that bankers who sidestepped the cap would face action from the EBA.
