European banks are racing to restructure executive pay deals by the end of March 2013 in an effort to adhere to the new European Union bonus rules.

A pay committee member told the Financial Times: “It couldn’t be a more difficult time. Our lawyers thought they had all the paperwork done and signed off. Now they’re looking at whether they can redraft everything in time.”

The EU has already agreed to limit senior bankers’ bonuses at the level of their salaries. However, restructuring pay deals of chief executives remains major concern for the banks since it requires voting of shareholders.

Pay experts believe that there will be significant salary inflation to compensate the limits that may include merger of annual bonuses and long-term incentive plans.

“Banks are going to have to roll up their sleeves to get these schemes restructured fast,” a senior fund manager told FT.

“That would really put people on the spot. It would be incredibly dangerous reputationally,” a bank chairman told the FT on missing the deadline. He said: “I can’t really see any other option. If the banks do start to perform well . . . chief executives will deservedly want good pay and that will have to be in fixed pay rather than bonuses.”

Most of the investors and regulators are against the idea of moving away from performance-based pay as it reduces banks flexibility.

Earlier this month, HSBC paid only 52 per cent of the maximum annual bonus to its chief executive Stuart Gulliver.

“Metrics like those are likely to be tweaked so that you can more easily get a 90 per cent payout,” a pay expert told FT.