A new piece of legislation has been proposed by MEP Arlene McCarthy which suggests that bonuses should not be higher than 50 per cent of total annual remuneration.
Half of bonus payouts should be paid in the form of shares which would not be divested for three years under the proposals, reports the Financial Times.
Up to 60 per cent of bonuses could also be deferred for the same length of time if plans are approved by the European Parliament and European Union member states.
The proposals also want to introduce a ban being introduced on the payment of bonuses to directors of financial institutions still receiving government aid.
Last week, a survey of 16 global banks suggested that the UK Treasury is set to receive around $3.75 billion from its one-off 50 per cent levy on bankers' bonuses.
By Asim Shah