If the measure, opposed by the British government, becomes European law, the coveted bonuses that many bankers receive would be capped at no more than equal to their annual salaries, starting next year. Only if a bank’s shareholders approved could a bonus be higher — and even then it would be limited to no more than double the salary.

The move, part of a package of banking regulations known as Basel III that is aimed at reducing the danger of big bank failures, was hailed Thursday by some European lawmakers.

‘’We’ve achieved the most comprehensive banking reform in the European Union,’’ said Othmar Karas, an Austrian member of the European Parliament who helped find a compromise in a late-night negotiating session with representative from E.U. member states and the European Commission.

A majority of the Union’s 27 member nations would need to approve the rules for them to take effect.

The agreement, which would also apply to those working at overseas offices of European banks, is a potential blow to Britain. Its economy partly relies on generous remuneration packages to ensure that the City of London remains the biggest financial center in Europe and serves as an overseas base for big banks from the United States and Asia.

‘’We need to make sure that regulation put in place in Brussels is flexible enough to allow those banks to continue competing and succeeding while being located in the U.K.,’’ David Cameron, the British prime minister, said Thursday while visiting Riga, the capital of Latvia.

Mr. Cameron said Britain would ‘’look carefully’’ at the final proposal before deciding how it would address the issue with other European governments.

The agreement on the proposed banking rules reflects the global backlash against the lavish compensation in the financial sector that many politicians say rewarded risky trading and investments that triggered the financial crisis. Voters in Switzerland, which is not an E.U. member, will go to the polls this weekend for a referendum that will decide whether shareholders should have more control over executive compensation.

The limits on bonuses would also apply to bankers employed by E.U. banks but working outside the bloc, in New York, for example. The E.U. authorities are drafting separate rules that could restrict remuneration at private equity firms and hedge funds.

‘’This legislation was resisted tooth and nail by the industry,’’ said Philippe Lamberts, a Belgian member of the Parliament’s Green bloc.

While the battle has often been portrayed as pitting Britain against the Continent, Mr. Lamberts said, the reality has been that ‘’many in Paris, as well as Frankfurt and Berlin, were not too happy’’ about what was happening in Parliament, but were glad to let Britain take the heat for leading the opposition.

The law is intended to reduce the financial incentives that led bankers to take risky bets, like those made on subprime housing debt in the United States during the credit bubble. But some critics of the legislation have warned that institutions might defeat the intent of the legislation by simply raising bankers’ base pay.

Mark Boleat, the policy chairman at the City of London Corp., which is the voice of London’s financial center, said Thursday that ‘’removing flexibility from pay arrangements in this highly cyclical industry would seem counterintuitive, especially if it leads to higher fixed salaries.’’

Some bankers said the rule posed the question of why the bonus cap would not apply to other industries where staff members stand to gain large bonuses. Stephen Hester, the chief executive of Royal Bank of Scotland, told BBC radio on Thursday morning that he did not think ‘’bankers should be treated as special creatures in any way.’’

David Jolly contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/03/01/business/global/european-union-agrees-on-plan-to-cap-banker-bonuses.html?partner=rss&emc=rss