(FT) -- Working as a trader or an investment banker at a European bank might be about to get a whole lot less lucrative.
Sweeping new guidelines on bonuses set to be issued by banking supervisors from all 27 European Union nations will force a radical overhaul of how banks pay their top performers in an industry that already claims to be suffering from regulatory overload.
However, they could also throw up peculiar anomalies that would disadvantage European banks in vital markets such as the US and Asia, senior bankers have warned.
Draft guidelines on how tough new rules on pay agreed by the EU this summer should be interpreted may require banks to impose a range of new limits, including capping bonus payments at a multiple of annual salary and limiting the cash component of bonuses to 20 per cent of the total amount.
Those two measures alone would mark a huge change for an industry that is based -- at least in theory -- on the premise of pay for performance.
But perhaps the biggest potential blow to European banks is the fact that the draft proposals would apply to senior staff and "risk-takers" across the worldwide operations of European-based organisations.
That means that a banker working for Barclays Capital, Barclays' fast-growing investment banking operation, or Deutsche Bank on Wall Street or in Hong Kong would be hit by the new regulations.
By contrast, bankers and traders at Goldman Sachs and JPMorgan Chase would only be caught if they work in EU financial centres. The same would apply to the two big Swiss investment banks, UBS and Credit Suisse.
The Committee of European Banking Supervisors, the umbrella body for banking regulation across the EU, concluded its discussions in London on Thursday night and it is possible the draft guidelines published will differ. But even if they are softened, they are still likely to force a fundamental rethink of how banks are structured.
CNN
