London hedge funders hit by bonus clampdown

London hedge funders will be hit by a new clampdown on bankers' bonuses expected to pass into law in Brussels in time for next year. The European Parliament is expected to enact a proposed limit on any more than 30 per cent of a banker's or hedge funder's bonus being paid in cash. The remaining portion will be delayed and linked to long-term performance, with 50 per cent paid in shares.

The BBC's Brussels correspondent Dominic Hughes says the European Parliament blames the bonus culture for encouraging the sort of risky behaviour which led to the financial crisis, and member countries such as Greece and Spain having to take dire measures to rescue their economies.

With 80 per cent of European hedge funders based in London, most of the complaints are likely to come from here.

Large severance packages for departing executives will also be limited. "These tough new rules on bonuses will transform the bonus culture and end incentives for excessive risk taking," says MEP Arlene McCarthy.

The rules will not limit the size of bonuses that can be paid - only the proportions that must be paid in cash and shares, and the timing of those payments.

Read a full report at the BBC. ·