Business

EU moving to cap banker bonuses

Protesters impersonated bankers in a demonstration against the industry in Brussels in 2010.

Virginia Mayo/Associated Press/File 2010

Protesters impersonated bankers in a demonstration against the industry in Brussels in 2010.

BRUSSELS — The European Union moved a step closer Thursday to imposing strict curbs on bonus pay for bankers, which has been blamed by politicians for inciting the risk-taking behavior that triggered the financial crisis.

A provisional agreement between the European Parliament, European Commission, and national representatives could mean bonuses will be capped at the level of annual salaries starting next year.

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The agreement was seen by some as a blow to Britain, which partly relies on generous remuneration packages to ensure the City of London remains the biggest financial center in Europe.

“We need to make sure that regulation put in place in Brussels is flexible enough to allow those banks to continue competing and succeeding while being located in the UK,’’ said David Cameron, the British prime minister.

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A majority of EU states still must give final approval for the legislation to go into force.

The bonus rules would also apply to bankers employed by EU banks but working outside the bloc, for example in New York. EU authorities are also drafting rules to restrict remuneration at private equity firms and hedge funds.

Amid concerns that capping bonuses could mean bankers begin to migrate to banks in more economically dynamic locations, lawmakers emphasized the proposal would include provisions for remedying such side effects.

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