Germany to curb executive bonuses at bailed-out banks

Banks that received state support during the financial crisis will face a threshold on executive remuneration under new laws from the German government.

After a year in the drafting stages, the legislation forbids the four lenders in which the government bought stakes in 2008 from paying annual salaries higher than €500,000 (£436,800).

They will also be banned from awarding an additional bonus.

However, the rules indicate that any bank that returns at least half of the federal government's rescue fund will be permitted to exceed the pay limits.

This aspect of the legislation was criticised by Gerhard Schick, parliamentary spokesperson for opposition party the Greens.

He told Bloomberg that it will effectively give the banks "carte blanche to ramp up bonus pay the minute the government pulls out of its rescue stake".

An €18 billion bailout was provided by the state following the collapse of Lehman Brothers, the investment bank that sent shockwaves around the global financial industry when it folded in September 2008.