In the 1990s, London-based investment banks rewarded top employees with gold bars, fine wine and oriental carpets to dent the impact of higher payroll taxes.
Now, with public anger at banking excess near all time highs, they are looking at less flashy ways to cope with curbs on bonuses, including a new monthly allowance.
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European rules due to take force in January say bankers' bonuses cannot exceed annual salary, or twice that if shareholders approve, to curb the sort of excessive risk-taking blamed for the 2008-09 financial crisis.
Salaries have not dropped in line with banks' revenues since the crisis, consultancy McKinskey said this month, despite a series of huge, taxpayer-funded bank bailouts.
At least 10,000 bankers, most of them in London, take home more than half a million euros ($678,700), according to industry sources, more than 10 times the average wage in wealthier European states.
With much of pay currently in bonuses, the biggest banks in London, including Deutsche Bank, Barclays and JP Morgan, look certain to bump up salaries.
Britain and the banks in what is Europe's financial capital argue the new rules play into the hands of competing financial centers such as New York, Hong Kong and Singapore.
They also say it provides less scope to claw back pay if it turns out an individual had taken too much risk, and limits the ability to pay bonuses in shares awarded in the future.
The cap affects all "risk taking" staff for EU banks and the European staff of those outside the trading bloc, so all major investment banks are affected, including U.S. lenders such as JP Morgan and Goldman Sachs.
"There's absolutely no question that fixed pay is going to rise," said Jon Terry, partner at PwC. "But the standard response may not be by increases in salary, by far the most common response will be the introduction of allowances.
"They are a bit more flexible, but it will fundamentally involve a shift of a proportion of variable pay into fixed pay."
Britain's Barclays last week said it will increase fixed pay using such a structure. It plans to give bankers in specific risk-taking roles an additional monthly payment, set at the start of the year and to run for 12 months.
The top-up will not be included in pension calculations and could rise or fall depending on demand for a particular role.
Other banks, such as JPMorgan, Deutsche Bank and HSBC, are expected to consider similar plans, and could vary the structure with longer payment terms or by paying it quarterly.
While raising fixed pay is likely to be the most obvious response to the bonus cap, generous housing allowances and loyalty payments could also be considered.
HSBC Chief Executive Stuart Gulliver said he would "take whatever steps necessary to protect the competitiveness" of his bank, noting that three-quarters of staff affected by the rules work outside the European economic area.
PwC's Terry said more than 80 percent of 40 banks surveyed by his firm last month said they planned to use allowances as their primary response to the bonus cap.
The British government has launched a legal challenge to the legislation arguing that it will force up fixed salaries, making the banks riskier rather than safer.
"Firms' remuneration strategies may become less flexible which could make adjustment during periods of stress more difficult, undermining financial stability," the UK's Prudential Regulation Authority said.
But other countries do not think the EU is going far enough. The Dutch government on Tuesday said it will cap bonuses at banks at no more than 20 percent of total salary from 2015, although overseas staff could get higher amounts.
The European Banking Authority, the watchdog overseeing the rule, said any staff earning more than 500,000 euros a year are likely to be affected.
It could also include any employee whose bonus is at least 75,000 euros and 75 percent of their fixed pay, or anyone paid more than the lowest member of senior management. The rules will be finalized early next year.
Some 3,175 bankers earned 1 million euros or more in the EU in 2011, indicating at least 10,000 people would be caught by a rule covering any employee earning half that amount, according to published salary scales.
The British Bankers' Association has said more than 35,000 people could be affected at 10 major banks it surveyed, representing 5.5 percent of their global workforce.
More than three-quarters of the top EU bank earners were based in London, fuelling the city's property prices, swanky restaurants and upmarket shops.
In 2011, the bonuses of London's top bankers were 3.5 times fixed pay, EBA data showed, meaning their employers would need to switch almost 400 million euros to fixed pay from bonuses to meet the new rules in aggregate.
The rules come into effect in January, but will not apply to bonuses for 2013, which are typically paid in February and March.
Barclays said it discussed its plan with regulators and shareholders.
Investors are keen for banks to rein in pay, and George Dallas, director of corporate governance at F&C Investments, said banks need to follow the spirit of the law as well as the letter to avoid "further regulatory scrutiny and public disapproval".
"How banks respond to this (bonus cap) regulation will be one of the key issues in 2014," Dallas said.
Bonuses for 2013 at most investment banks are expected to be flat or slightly lower than the year before, following a drop in revenues.
($1 = 0.7367 euros)
(Editing by Carmel Crimmins and Philippa Fletcher)