Huge pay-offs in the finance industry could become a thing of the past as the European Parliament demands that limits on bankers’ bonuses to be made law.
The European parliament wants to see bankers’ bonuses as no higher than their salaries, requiring three quarters of a bank’s shareholders to agree for a bonus to be double that.
Whilst this limit may be eased during negotiations, the general agreement for a bonus cap has been accepted as means of curbing excessive risk taking in investment banking, although this principle is contested. The Economist reports that the total bonus pool paid to bankers in London will fall to roughly £1.6 billion – from a peak of £11.6 billion in 2008.
Retail banking bonuses are undergoing re-structure as well, and many bankers argue that a lot is already being done to overhaul the pay and bonus structure in banking.