Lawmakers won’t cave in to pressure from governments to scrap a proposed ban on bankers getting bonuses worth more than double their salaries, the European Parliament’s chief negotiator on the compensation curbs said.
Othmar Karas, an Austrian member of the assembly, said he wouldn’t accept any backtracking on the cap, which was tentatively agreed on with government officials in December. The pay curbs are part of a draft law to implement Basel bank capital rules in the 27-nation EU.
“The parliament does not go into reopening questions which have been tackled previously,” he said. “The cap on bonuses has been agreed,” he said, referring to compromise talks last year led by Cyprus, which held the EU’s rotating presidency until Dec. 31. Karas made similar comments in an interview published yesterday by Boersen Zeitung.
Bankers are facing a backlash from EU lawmakers determined to cut variable pay as part of a quest to reshape lenders as utilities rather than money-making machines. Public outrage and shareholder rebellions have already led some banks to limit payouts.
Cyprus, which handed over the EU presidency to Ireland on Jan. 1, sought a compromise with legislators, who had called for a ban on bonuses larger than fixed pay.
Karas’s stance sets up a clash with governments who balked at the parliament plans, on concerns that they would harm the bloc’s competitiveness.
Nations including the U.K. have called for an unwinding of draft agreements on the law brokered on Dec. 13 by lawmakers and Cypriot officials, including on banker pay.
Under the draft accord, Cyprus agreed that bonuses would be capped at twice fixed pay, in exchange for the parliament compromising on the procedure for adopting bank liquidity and leverage rules.
The negotiations on pay have hampered the EU’s work to implement the Basel capital rules, and contributed to the bloc missing an international deadline of Jan. 1 to begin phasing-in the standards.
Karas’s plan is for the EU to begin phasing-in the rules on Jan, 1 2014, and then to fall back into line with the original Basel timetable, which foresees full application of the measures from 2019, according to Boersen Zeitung.
Karas said he hoped a deal on the draft law could be reached by the end of this month, allowing parliament to vote on it in March.
Stefaan De Rynck, a spokesman for Michel Barnier, the EU’s financial services chief, declined to comment.