Thousands of British workers in the banking sector could see their bonus opportunities reduced by new EU regulations.
The European Banking Authority has extended its bonus cap to small banks and building societies as well as subsidiaries of banking groups such as asset management and insurance.
The regulator also tightened up on “role-based allowances”. These share payments were widely used by banks to get around the bonus cap and called them fixed payments.
But the EBA said that most to date were flexible and so counted as bonuses.
"Remuneration is either fixed or variable; there is no third category of remuneration," the EBA said in its document.
The authority said it was clarifying existing laws on pay and noted that the rules have been applied ambiguously by banks in the EU.
For the UK, some 200 banks and building societies regulated by the Bank of England as well as 1,000 other financial companies regulated by the Financial Conduct Authority could have to abide by the rules. Many had previously been exempt.
The EBA is now consulting on the rules, and plans to finalise them by the end of the year.
Once finalised, the UK will have to comply by enforcing the cap in line with the guidelines, or explain why they are not doing so.
