EU Extends Banker Bonus Cap to Fund Managers

The European Union has mirrored the banker bonus caps for fund managers in a bid to ensure less risk taking with Europe's financial system.

EU officials announced in a media statement that EU member states have up to 18 months to introduce the law, once it is formally signed off over the next two months, which will include a three year deferral of 40% of bonuses.

In addition, fund managers are required to invest half of any bonus in the funds they run. The rules stopped short of limiting bonuses at the level of their annual salary, as is the case for bankers.

"We want to ensure that responsible remuneration policies are in place across the financial sector and that there are no loopholes for risky and dangerous trading practices," said EU lawmaker Arlene McCarthy, in a media statement.

"The new rules will bring funds in line with EU bankers bonus rules, as there will be no guaranteed bonuses for fund managers and 40% of bonuses must be deferred."

Sven Giegold, a German lawmaker involved in the negotiations, added in a media statement: "Today's deal will deliver greater protection for investors, as well as taking steps to reduce reckless risk taking in the investment fund sector."

"The stricter rules on depositaries will ensure fraudulent schemes, like the (Bernard) Madoff case, cannot occur in Europe," he added.