A rise in fixed salaries, monthly allowances, and other incentives has led to 10,000 bankers taking home €500,000 a year as firms try to counteract the European Union bonus caps and retain talent.
According to a range of financial recruiters and analysts, bankers' fixed pay has not dwindled despite fluctuations in the company's revenues, taxpayer funded bailouts. Meanwhile monthly allowances, including generous housing allowances and loyalty payments, are being considered.
"There's absolutely no question that fixed pay is going to rise," said Jon Terry, partner at PwC in a media statement.
"But the standard response may not be by increases in salary, by far the most common response will be the introduction of allowances.
"They are a bit more flexible, but it will fundamentally involve a shift of a proportion of variable pay into fixed pay."
He added that more than 80% of 40 banks surveyed by PwC in October said they planned to use allowances as their primary response to the bonus cap.
According to published salary scales, 3,175 bankers earned €1m (£832,707, $1.4m) or more in the EU in 2011.
The bumper salary rise, monthly allowances and incentives follows new legislation voted through the European Parliament and European Commission which will limit bankers' bonuses to 200% of their salary.
The law, which comes into force from January 2014 and will apply to bonuses paid in 2015, is intended to discourage irresponsible risk-taking and curb the bonus driven culture in banking following the financial crisis.
The European Banking Authority (EBA) has yet to flesh out all the detail of the new rules, but the organisation said the cap would be applied to "risk-takers".
It added that any staff earning more than €500,000 a year are likely to be affected.
The UK government attempted to prevent the law passing in March, but was unsuccessful.
"Firms' remuneration strategies may become less flexible which could make adjustment during periods of stress more difficult, undermining financial stability," the UK's Prudential Regulation Authority added.
Banks Protecting Remuneration
Banks around the world have argued that a cap in EU bonuses will hit the region's competitivity compared with major financial centres, such as Hong Kong and Singapore.
According to the British Bankers' Association, more than 5.5% of the 10 major banks global workforces could be affected by the bonus caps, equating to 35,000 people.
Recently, HSBC's chief executive Stuart Gulliver that he would protect bankers' bonuses and "competitive salaries" against the new rules.
Speaking on an investor call, following HSBC's third quarter results announcement, Gulliver said he "will do what[ever] it takes to protect [the bank's] competitive position on pay amid the EU bonus cap."
The pledge comes as the bank posted a 10% jump in profits for the third quarter this year following an aggressive cost cutting plan.
Meanwhile, reports say that Britain's second largest bank Barclays will boost fixed pay for some workers next year to counter the European Union's new bonus rules.
The new payment system means that some employees will receive remuneration on top of their base salaries and variable bonuses.