Europe's tough rules to curb bank pay “fly in the face” of efforts to stabilise the financial system and would also drastically limit shareholders’ power over boards, the CBI has warned.

The UK trade group has condemned “worrying” talks in Brussels over plans to ban bonuses bigger than salaries and pass the toughest pay restrictions in the world. An informal paper circulated by British diplomats over the weekend warned that setting a tight ratio between bonuses and pay would lead to higher salaries, not lower remuneration.

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Katja Hall, CBI chief policy director, said in a statement: “These are worrying discussions because a move away from variable to fixed pay is in complete contrast to what we’re trying to achieve, to ensure that pay properly reflects performance. “This would take the power to hold companies to account out of investors’ hands, by removing tools such as voting on pay policy and implementation, and on board selection. Such a move would fly in the face of financial stability, by removing companies’ ability to quickly respond to a downturn by adjusting pay.”.....Read more here