The City of London’s big banks are considering suing the EU over rules to cap bonuses after receiving legal advice that the pay regulation could be struck down in court.

The drastic options being weighed up by bankers underline industry anxiety over a fixed ratio pegging bonuses to salary, which will be debated by EU finance ministers in Brussels today.

George Osborne, the UK chancellor, is planning to fight a rearguard action to revise the terms of the cap but diplomats are doubtful Britain will secure major changes at such a late stage.

The stark odds against Mr Osborne are prompting banks to consider other radical steps, including suing. – (Copyright The Financial Times Limited 2013)