TOP bankers at some of London's major American finance houses are set to have the cash element of their pay slashed.

Ken Feinberg, the Obama administration's so-called pay czar, is set to rule that top employees at the companies bailed out by the US administration should have large parts of their salaries paid in the shares of their companies and tied up for five years.

The American investment banks to be affected by such a measure are Bank of America — which includes Merrill Lynch — and Citigroup.

The ruling would also hit employees of AIG, the stricken insurance giant, and the US automotive groups General Motors and Chrysler and their finance arms.

The aim of the restrictions — the latest in the clampdown of fat-cat pay in corporate America — is to prevent short-term risk-taking by tying compensation to performance.

Companies bailed out by Washington have already had bonuses banned for top employees and restricted to one-third of salary for other staffers.

The clampdown could see as much as 50% diverted into stock. The Obama administration is said to hope the restrictions will be seen as best practice at other major US banks and companies.