Planning ahead for EU caps on bankers' bonuses

On 5 March 2013, a political agreement was reached for EU-level regulation to cap bankers’ bonuses.

Given longstanding demands from the European parliament to limit EU bankers’ pay and unhelpful survey data from the European Banking Authority showing that CRD3 had not done its job in tackling pay levels, the arrival of a cap in some shape or form was inevitable. British opposition to the proposals was unlikely ever to prompt a U-turn in negotiations.

The reality that bonus cap rules will apply from 2014 onwards - assuming that CRD4 legislation is finally approved - has instilled an understandable sense of urgency into the need for firms to review and amend their remuneration arrangements. So what do we know and are there any clear solutions yet?

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