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EU agrees to limit banker bonuses

February 28, 2013 RSS Feed Print

Stephen Hester, the chief executive of Royal Bank of Scotland, which was bailed out by British taxpayers, struck a more cautious note.

"I don't think bankers should be treated as special creatures in any way to tell you the truth," he told the BBC. "Perhaps one of the problems of the past was bankers got to the point where they thought they were special creatures. I think we should apply rules to everyone whatever those rules may be."

The new capital rules in the financial reform package require all banks to gradually increase their capital reserves over the coming years to stabilize the financial sector across the EU's member states, which together form the world's largest economy.

The world's largest economies, including the U.S., have committed to adopting the Basel III rules. They are part of a global effort to prevent another shock to the financial system like that prompted by Lehman Brothers' 2008 collapse, when banks were highly leveraged while enjoying low capital requirements. The lack of solid financial cushions meant that many banks were vulnerable, and eventually required taxpayer-funded bailouts to avoid bankruptcy.

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Danica Kirka in London and Gary Peach in Riga, Latvia contributed reporting.

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Juergen Baetz can be reached on Twitter at http://www.twitter.com/jbaetz

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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