Leading investment bankers are proposing new guidelines on pay and bonuses in the financial sector as they seek to head off a growing political backlash against what have been seen as excessive rewards for bankers whose risk-taking helped cause the credit crunch.

In particular, the Institute of International Finance, a global association of banks, is seeking to create a code of best practice, which would discourage banks from giving incentives to traders to take excessively risky bets and from failing to censure them if these turn sour.