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The European Union will curb bonuses paid to bankers from next year. The new cap was agreed by the European Parliament and the EU's national governments on Wednesday.
Under the new rules, cash payments paid to bankers will be capped at 30 percent of the total bonus, and to 20 percent for particularly large bonuses. And instead of an upfront cash payment, a large portion of any bonus must be deferred. That amount can later be recovered if investments don't perform as expected. Bonus-like pensions are also covered by the new regulations.
The new rules also introduced capital requirements for banks. The new measures are set to be approved by European lawmakers on July 7. The bonus cap is expected to take effect from January 2011. The new capital requirements will come into force a year later.