LONDON, Oct 23 (Reuters) - European bankers could be paidbonuses of up to 250 percent of their fixed pay under a slightrelaxation of tough new pay rules due to come in next year, aslong as much of the sum is deferred for at least five years.
The European Banking Authority issued a consultationdocument on Wednesday detailing aspects of a "discount rate"that banks can apply under the European Union's new bonus rules.
The EU plans to cap bonuses of senior staff to 100 percentof their fixed pay, or 200 percent if shareholders approve ahigher payout.
The discount rate would allow banks to pay up to another 50percent in instruments that are deferred for at least fiveyears.
The UK government and many banks have opposed the EU plan,saying it will see banks ramp up fixed salaries and could seestaff leave London for elsewhere. The discount rate has beenproposed as a modest concession.
The EBA consultation said the extra pay would depend on acomplex calculation based on inflation rates, sovereign bondyields and how long the pay is deferred.
"Whilst the discount provisions may be useful ... they donot seem to be sufficient to prevent banks increasing fixedremuneration in order to stay within the bonus cap withoutsubstantially reducing senior employees' overallremuneration. This has the feel of tinkering around the edges,"said Andrew Stanger, partner at international law firm MayerBrown.
Banks are already working on plans to work around the bonuscap. Barclays is considering giving senior staff caughtby the rule an additional monthly cash sum, on top of base payand bonus, to get around the rules and avoid a permanent rise incosts, a person familiar with the matter said on Wednesday.
The EU has said the cap will apply to thousands of bankersin risk-taking positions. The EBA said it will finalise rules onwho is affected by the end of March.
Barclays (BARC)
