Tough restriction on bank bonuses

Brussels/London: European regulators are set to usher in a tough set of restrictions on the bonuses that banks will be allowed to pay their staff.

Only 20-30% of bonuses can be paid in upfront cash, according to proposed new guidelines announced by the Committee of European Banking Supervisors.

Under the so-called Basel III rules, international banks will have to provide a scorecard for each banker to prove they deserve a bonus. The rules are much tougher than those agreed by the G20 countries. Although the guidelines for European national financial regulators are not obligatory, a spokesman for the Financial Services Authority (FSA) confirmed that the British bank watchdog and its European counterparts intend to implement them in detail. The proposals are subject for consultation until February 25.