An Oireachtas committee has backed EU proposals to reform financial regulation, which include a cap on bankers’ bonuses to deter excessive risk-taking.

A report published yesterday by the Oireachtas Joint Committee on European Scrutiny supported the proposal to “force banks to impose more responsible policies when paying out bonuses”. The new regulations will compel credit institutions to restrict bonuses, ensuring that at least 50 per cent of payments are comprised of shares and 40 per cent are deferred over three years.

The committee said it supported the notion that banks needed to have sufficient capital and liquidity but expressed concern that forcing banks to retain too much capital might affect the flow of credit into the economy.

The report will now be sent to Minister for Finance Brian Lenihan.