BRUSSELS (AP) ― The European Parliament on Tuesday voted in favor of reforms to strengthen the bloc’s financial sector, including a new law to cap bankers’ bonuses.

The rule limits bonus payments at one year’s base salary, or double that if a large majority of a bank’s shareholders agrees. It will come into force next year and will also apply to European units of foreign banks and the employees of EU banks working overseas ― in New York, for example.

Lawmakers in Strasbourg overwhelmingly backed the proposed law and passed a sweeping package of financial regulation that will force banks in the 27-nation European Union to strengthen their capital buffers.

“We are making our banks more resilient to crises with today’s decision so that they no longer have to be bailed out with taxpayers’ money,” said Othmar Karas, a leading conservative lawmaker who oversaw the legislation. 

The new reforms ― detailed in a 1,000-page document ― also lay important groundwork for the creation of a centralized banking supervisor for the eurozone, a cornerstone of the 17-country currency bloc’s effort to tackle its debt crisis.

“This is the foundation for the single rulebook for banks and will ensure that banks across the EU build up the necessary capital to absorb future shocks themselves,” said EU Commission President Jose Manuel Barroso.

The package of financial reforms ― which implement the internationally agreed Basel III rules ― were hammered out earlier this year after months of arduous negotiations between EU governments, the EU Commission and parliament. They now have to be implemented in national law by next year.

Karas called the set of rules the “most comprehensive and far-reaching banking regulation in the EU’s history.”

Britain, which is home to the bloc’s biggest financial hub, in London, was vehemently opposed to capping bankers’ bonuses, but found itself isolated. While not all countries felt strongly about the bonus cap, the EU’s remaining 26 nations accepted the parliament’s proposal in a bid not to hold up the entire package of financial reforms.

Proponents of the bonus cap say the payments encouraged bankers to take massive risks at the expense of the long-term future of their businesses, helping to destabilize the financial system and trigger the 2008-2009 financial crisis.

“The rules will put an end to the culture of excessive bonuses, which encouraged risk-taking for short-term gains,” Barroso said. “This is a question of fairness. If taxpayers are being asked to pick up the bill after the financial crisis, banks must also make a contribution.”

Britain maintains a bonus cap will only lead to an increase in bankers’ fixed pay, drive talent away and harm its financial industry.

The different legislative packages were adopted by about 600 European lawmakers, with about 40 or less voting against them.