The European Union's February decision to outlaw banker bonuses that are more than twice fixed pay was an effort to curb excessive payouts and asymmetric risk-taking. The UK challenged the caps as illegal in September (and the case has yet to be decided) but the European Banking Authority softened its stance last week by allowing banks to exempt staff earning up to EUR 1 million from the rules that cap bonuses. It seems the bankers are making hay while the sun shines as Bloomberg now reports, Managing Directors at banks in London are expecting a 44% rise in bonuses for 2013 - to more than double their average salary.

Via Bloomberg,

Managing directors at banks in London are expecting a 44 percent rise in bonuses for 2013 even as European authorities seek to scale back compensation, according to a recruiter’s survey.

The average bonus for managing directors may increase to 166,955 pounds ($271,686) from 115,618 pounds a year earlier, Astbury Marsden said in an e-mailed statement. That’s more than double their average salary, up from 88 percent in 2012, the recruitment firm said.

“Despite pressure to keep a lid on bonuses, as the economy recovers and bank profits start to return, it’s not unreasonable that bonus expectations also rise,” Mark Cameron, chief operating officer at Astbury Marsden in London, said in the statement. “Although prospects have improved, some may find themselves disappointed this year.”

The European Union brokered a deal in February to outlaw banker bonuses that are more than twice fixed pay, a move lawmakers said would prevent excessive payouts and curb risk-taking. The U.K. in September challenged the caps as illegal at the EU’s highest court in a case that has yet to be decided.

The European Banking Authority softened its stance on bonuses somewhat, stating on Dec. 13 that banks will be able to ask national regulators to exempt staff earning as much as 1 million euros ($1.4 million) from rules that cap bonuses at twice fixed pay.

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Britain was home to 2,188 investment bankers earning more than 1 million euros in 2012, the largest share in the EU, while Spain had 37, the London-based EBA, set up in 2011 to harmonize banking rules in the EU, said in a survey last month. France and Germany had 117 and 100, respectively.