EU officials agree to cap bonuses for bankers

Bankers could face a cap on their bonuses as early as next year after EU representatives reached the first agreement of its kind to curb pay in the financial sector.

The provisional agreement, announced after late-night talks between EU officials, would see bonuses capped at one full years' salary, but can rise to two years' pay with the permission of shareholders.

The cap is part of wider controls that will force banks to create larger cash buffers against future shocks.

But it represents a setback for the British government, which has long tried to protect its large financial sector from absolute limits on bonuses.