Senior UK bankers will receive their bonuses years earlier under plans by the Bank of England to relax post-financial crisis restrictions.

The proposals are to reduce the bonus deferral period for some of the most senior bankers from eight years to five .

Less senior bankers would get their bonuses after four years, in a further relaxation of the restrictions. Bankers would also be able to receive some of their bonus in the first year, instead of having to wait until the third year.

In the EU, bankers’ bonuses are typically deferred for three to five years, while the US has no such restrictions.

Sam Woods, the chief executive of the Bank of England’s Prudential Regulation Authority (PRA), said: “These proposals on bankers’ bonuses will support UK growth and competitiveness without undermining financial stability. We should not return to the very dangerous pay structures that were commonly in place before 2008, but these proposals will reduce bureaucracy and support responsible risk-taking.”

A year ago, the UK scrapped the banker bonus cap, removing one of the key reforms introduced by the EU in the wake of the 2008 financial crisis to discourage excessive risk-taking. Since 2014, banker bonuses had been capped at two times their annual salaries.

The PRA and its sister regulator the Financial Conduct Authority (FCA), which are behind the relaxation of the rules, argue that the reduced bonus deferral periods provide enough time for any problems to surface. They should also help reverse a trend whereby banks have raised the amount of fixed salaries, which are not dependent on performance, rather than bonuses, which can be cut or clawed back.

The proposals, first floated by Woods last month, strongly encourage firms to tie bonuses closer to not just the successes of executives, but also any risk-management failures, according to the PRA and FCA, by introducing clarifications to existing policies to ensure firms consider adjusting pay when things go wrong.

The regulators also want to remove EU-originated guidelines that prohibit paying dividends or interest on deferred bonuses awarded in shares or other instruments, and require senior bankers to wait up to a year before being able to sell deferred bonuses in shares or other instruments.

Sarah Pritchard, the executive director for consumers, competition and international at the FCA, said: “These important changes will remove unnecessary duplication of rules between the regulators, streamline the remuneration regime for firms, and further strengthen the reputation and competitiveness of the UK banking sector.”

The new rules would also reduce the number of bankers subject to rules on their pay, and give companies more discretion to determine which employees will be subject to the rules. The consultation closes on 13 March.

Earlier this month Rachel Reeves told the FCA that it should encourage more risk-taking across the City as part of the chancellor’s pro-growth strategy.

The High Pay Centre thinktank said: “Huge bonuses for bankers impose costs on banks’ clients in the real economy as well as incentivising risky and destabilising behaviour, so excessive pay awards in the financial services industry matter to all of us.

“A deferral period of five years for the most senior banking executives is still a long time to wait so the PRA’s proposals are not unreasonable, but shorter deferral periods should theoretically lead to lower payouts – bankers are likely to apply less of a discount to the value of awards they can access sooner, so a smaller bonus deferred for five years has more value as an incentive than a larger one deferred for eight years.

“If this doesn’t reduce the size of payouts, it will be yet another sign of the dysfunctional governance of bankers’ pay and more evidence supporting the case for regulation.”