On February 27, the Council of the EU and the European Parliament announced that they had reached preliminary agreement on the legislative proposals for the CRD IV reforms, including on the key contentious issue of bankers’ bonuses. Bonus payments to bankers are to be capped at twice their annual salary and banks will be subject to a strict transparency regime. The basic agreement is a 1:1 ratio on salary relative to variable pay, which can rise to 1:2 in the event of shareholder approval consisting of at least 65% of shareholders owning half the shares represented (or 75% of votes in the event that there is no quorum). As well as the bonus cap, it was also agreed that banks must reveal their taxes and profits on a country-by-country basis from 2015, assuming that this measure is not judged as being an impediment to inward investment by the European Commission.

Member states will be required to transpose the CRD IV Directive by January 1, 2014, and it is expected that the European Parliament will vote on the provisional agreement, once formally endorsed by the Council, in its plenary session from April 15-18.