* Will be hard to avoid tough new EU bonus rules-law firm
* Base pay will rise, will be harder to hire in U.S., Asia
* Could also impact cross-border M&A
By Steve Slater
LONDON, Nov 2 (Reuters) - Europe's banks face a frantic last few weeks of the year to determine bonus payouts radically changed by tough new rules, which they say may hurt their ability to recruit overseas and win cross-border takeovers.
European regulators last month unveiled far-reaching curbs on bonuses, which go far beyond new global guidelines and aim to align pay with risks and curb bankers chasing short-term rewards. But a one-month consultation period means the rules will not be finalised until Dec. 9-10.
"The timing of the final rules is causing a genuine headache as it's all running up to the end of the year," said Alistair Woodland, a partner at law firm Clifford Chance in London.
The rules take effect from the start of January, and cover bonuses for 2010 performance for thousands of senior bankers.
Woodland saw limited scope for banks to avoid the new rules, as specific rules are backed up by broader guidelines.
"The EU has come out with a prescriptive set of rules that have to be applied. That goes a long way beyond what anyone else is doing," he said at a briefing on Tuesday.
"It's difficult to think of ways in which you can avoid them. If you found your way around one of the little rules you may be in breach of the principles."
Bankers have said knock-on effects from the new rules are already being seen and more will occur.
Already base pay is rising as banks see the need to reward star rainmakers with more in fixed pay to compensate for lower, deferred bonuses.
The rules will be applied to all the global operations of a European-domiciled bank, thus making it more difficult for European lenders to hire and retain bankers in Asia and the United States compared with more free-wheeling rivals.
In a takeover battle an EU firm could also be disadvantaged if its target is concerned about being subjected to the new rules, Clifford Chance said.
Other risks include a lack of consistency across all EU countries and limited resources for regulators to police them.
Banks and lobby groups have said the rules need to be applied consistently.
Under the rules bonuses will be capped on the basis of earnings and liable for repayment if shown to have been awarded for risky actions.
Only a portion of a bonus will be payable upfront, with 40 to 60 percent deferred over 3-5 years, depending on the risk profile of the staff member, and half of the bonus must be in shares or other securities.
As a result, if 60 percent of a bonus is deferred and half is paid in shares, the banker will only receive 20 percent of the overall bonus in cash immediately.
The guidelines are tougher than a remuneration code being applied in Britain, the EU's biggest banking centre, and also wider, with an expected 2,500 UK financial firms seen affected. (Editing by David Cowell)