European lawmakers vote for banker bonus cap, laws to strengthen banks' capital buffers

BRUSSELS – The European Parliament on Tuesday voted in favor of financial reforms, including a new law to cap bankers' bonuses.

The rule limits bonus payments at one year's base salary, or double that if a large majority of a bank's shareholders agrees. It will come into force next year and will also apply to European units of foreign banks and the employees of EU banks working overseas — in New York, for example.

Lawmakers in Strasbourg overwhelmingly backed the proposed law and passed a sweeping package of financial laws that will force banks in the 27-nation European Union to strengthen their capital buffers.

"We are making our banks more resilient to crises with today's decision so that they no longer have to be bailed out with taxpayers' money," said Othmar Karas, a leading conservative lawmaker who oversaw the legislation.

The new reforms — detailed in a 1,000-page document — also lay important groundwork for the creation of a centralized banking supervisor for the eurozone, a cornerstone of the 17-country currency bloc's effort to tackle its debt crisis.

The package of financial reforms — which implement the internationally agreed Basel III rules — were hammered out earlier this year after months of arduous negotiations between EU governments, the EU Commission and parliament. They now have to be implemented in national law by next year.

Karas called the set of rules the "most comprehensive and far-reaching banking regulation in the EU's history."

The different legislative packages were adopted by about 600 European lawmakers, with about 40 or less voting against them.