European bankers' bonuses reined in as MEPs vote in tough new limits .

EU internal market commissioner Michel Barnier. 

EUROPE'S bankers will be hit with the world's toughest curbs on bonuses as part of moves to curtail casino banking.

The European Parliament voted yesterday to limit the cash element of the payouts to 30 per cent and to cap bonuses according to salary.
At least half of the total will have to be paid in "contingent capital" - money to be held for at least three years by the bank as the first call against any liabilities.
MEPs overwhelmingly backed the new arrangements, scheduled to come in on January 1 for all bonuses received after that date.
The new rules, which must be transposed into national law by all 27 EU member states, were drawn up to curtail so-called casino banking, where risk-taking was rewarded instantly, regardless of the long-term consequences.
Sharon Bowles, the Liberal Democrat MEP who chairs the Parliament's Economic and Monetary Affairs Committee, said: "The taxpayer will no longer have to pick up the tab for bankers who bring down the financial institutions they work for through short-term risk-taking and greed."
The European Parliament voted 594-24 in favour of the legislation. It still needs final approval from finance ministers, who will rubber-stamp it at their meeting on Tuesday.
Upfront cash bonuses will be capped at 30 per cent of the total bonus and at 20 per cent for particularly large bonuses.
Between 40 per cent and 60 per cent of any bonus must be deferred for at least three years and can be recovered by the company if investments do not perform as expected.
At least 50 per cent of the total bonus would be paid as contingent capital and shares.
Strict limits will also be placed on rewards to employees of banks bailed out by taxpayers, including Royal Bank of Scotland and Lloyds Banking Group.
The limits will remain until taxpayers are reimbursed.
The Financial Services Authority, Britain's banking industry regulator, will have to toughen the remuneration guidelines it introduced last August, when it set the cash cap at 40 per cent for the most highly paid and 60 per cent for other senior staff.
The banking industry warned that the restrictions - which also cover hedge fund managers and asset managers - could hurt Europe's competitiveness, to the benefit of rival financial centres from Wall Street to Hong Kong.
Guido Ravoet, secretary-general of the European Banking Federation, said: "It is not up to public authorities to put in place figures, percentages. If the recommendations are not followed at the international level, financial centres like New York, Singapore and Hong Kong will benefit."
However, Michel Barnier, the EU's internal market commissioner, said: "There will be no return to business as usual. The EU is leading the way in curbing unsound remuneration practices in banks."