LONDON (Reuters) - Banks use of "allowances" to mitigate the effect of a European Union cap on bonuses could face a "coordinated policy response" sooner than expected, the bloc's financial services chief, Michel Barnier, said on Sunday.
The EU has capped banker bonuses to no more than fixed salary, or twice that amount with shareholder approval, following public anger at taxpayers having to shore up many lenders in the 2007-09 financial crisis which ushered in austerity across Europe and a fall in real wages for many people.
Barnier asked the EU's banking watchdog on Sunday to wrap up by the end of September its probe into whether the quarterly and monthly allowances several banks have begun giving top staff to increase their fixed pay can be allowed under the EU bonus cap rule.
Critics say such allowances are simply a ruse to get round the bonus cap by bumping up fixed pay.
The watchdog, the European Banking Authority, had said it would complete its probe into allowances and report back by the end of the year with possible new guidance for banks before the cap takes effect on awards handed out early in 2015 for performance covering 2014.
But Barnier published a letter on Sunday in which he asked the EBA to speed up its timetable for the probe.
"It is important to show a collective, proactive stance on this important matter and address the claims made that the spirit - if not the letter - of union law is being disregarded," Barnier said in his letter to EBA Chairman Andrea Enria and made available to the media.
"I would therefore be very grateful if you could share with us the results of your work on this issue as soon as possible and at the latest by the end of September, in order to ensure that we can address any concerns in a timely manner through a coordinated policy response," Barnier said.
Barnier has the power to propose amendments to EU law if he thinks it is being circumvented by bankers.
His intervention comes on the eve of a hearing in the bloc's top court on a challenge mounted by Britain to the EU bonus cap.
Britain, home to most of the bankers that will be hit by the cap, will argue before the European Court of Justice in Luxembourg on Monday that the rule, amongst other things, hands too much power to the EBA. The court is not expected to rule on Britain's challenge until the end of the year or in 2015.
(Reporting by Huw Jones; Editing by Hugh Lawson)