EU Nations Back New Bankers' Pay, Capital Rules

BRUSSELS (AP) — European Union countries on Tuesday backed new financial oversight rules for bankers' pay and how much extra capital banks should set aside to cover high-risk investments.

The new rules, agreed by finance ministers, still need the support of the European Parliament before they could enter into force in late 2011 at the earliest. Finance ministers said they were prepared to negotiate the details of the rules with lawmakers before they are finalized.

Swedish Finance Minister Anders Borg, whose country currently holds the rotating EU presidency, said he hoped that December talks among EU nations would finally seal a deal that would set up new EU supervisors to monitor banks, insurers and markets, and to watch out for major economic risks.

"If we don't have a decision in December ... then I would say that we have not drawn the right lessons from the (financial) crisis," he told reporters.

The rules agreed Tuesday would, for the first time, give financial supervisors the right to examine and fine banks if their pay reward programs trigger high-risk behavior, when traders or executives expose a bank to long-term losses by focusing too much on their own pay packets.