European regulators have backed tougher than expected draft rules on bankers' pay despite pressure from the UK and France to water down the restrictions.
If the draft rules are implemented, it would cap the amount of a bonus able to be taken in cash to a maximum of 30%.
On Thursday, the measures were passed by the Committee of European Banking Supervisors, made up of financial watchdogs from the EU's 27 members.
London argues that the new regime will make the European Union uncompetitive.
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EU agrees bank bonuses limit deal
The European Parliament has already cleared the proposals, which limit the cash payout to about 30% of standard bonuses, and a fifth of bumper ones.
The CEBS was meeting in London to discuss how to interpret the planned cap, amid pressure from the UK and France for the organisation to take a less strict reading.
An EU official said that draft regulations would be issued within the next few days, followed by a one-month discussion.
The new rules would apply to the worldwide operations of banks and subsidiaries operating within the EU.
Key points of the proposals include:
Cash element of standard bonus capped at 30%, and one-fifth for large bonuses;
New watchdog for European banks to define what is a big bonus;
40% of normal bonuses deferred or paid over several years, while 60% of big bonuses postponed;
A clawback mechanism, meaning a star banker might not receive the full payout if investments unravel.
The proposals go further than US rules, and if implemented are likely to prompt a wholesale restructuring of pay policies at financial institutions.