The European Union (EU) has agreed to limit bankers’ bonuses at two times salary and banks will be subject to a strict transparency regime under a provisional deal.

Members of the European Parliament have secured an agreement on a mandatory 1:1 ratio on salary relative to variable pay, which can rise to 2:1 with explicit shareholder approval.

The deal includes minimal concessions to reduce the most severe pay crackdown since the 2008 financial crisis.

For the City of London, the impact of deal will be partly softened by giving more favourable treatment to long-term pay linked to the health of a bank, such as equity or bonds that are written down when an institution fails, according to the Financial Times (FT).

The deal, if approved, will pave the way to legislate the Basel III capital rules. Apart from a prized bonus cap, banks of the EU have to reveal their taxes and profits on a country-by-country basis from 2015.

Michel Barnier, the EU commissioner responsible for the reforms, said it was “difficult to imagine now that we would scrap this compromise”.

London mayor Boris Johnson, in a statement, said: “People will wonder why we stay in the EU if it persists in such transparently self-defeating policies. Brussels cannot control the global market for banking talent, Brussels cannot set pay for bankers around the world.”

Once approved, banks are required to strengthen their buffers of equity and liquid assets to Basel standards over the next six years.

“I don’t think bankers should be treated as special creatures in any way - perhaps that was one of problems of past,” Stephen Hester, CEO of Royal Bank of Scotland, told the BBC. “We’ve got to apply the rules to everyone whatever those rules may be,” he added.

EU will investigate the data of big banks in 2014 and has the right to recommend a delay to implementation if the transparency is shown to significantly hurt the competitiveness of EU companies.

Vicky Ford, a British MEP who negotiated for the parliament, told the FT: “I hope there can be a workable solution [on remuneration]. But banks need to look at the whole of the package.”

Othmar Karas, the European Parliament’s negotiator said: “For the first time in the history of EU financial market regulation, we will cap bankers’ bonuses . . . The essence is that from 2014, European banks will have to set aside more money to be more stable and concentrate on their core business.”