LONDON (Reuters) - Europe's bonus regime needs to be overhauled, but shareholders, not a ratio fixed by law, should determine remuneration in banks, a top EU official said in an interview with the Times newspaper.

Proposals being pushed by the European Parliament would introduce into law a fixed ratio between bankers' pay and bonuses, a move that bankers say would drive up base salaries.

Michel Barnier, the EU commissioner responsible for the single market and regulation said that he would prefer to give shareholders the power to determine remuneration and would work on a compromise with the European Council and the Parliament.

"Why do I talk about shareholder responsibility? That is because they are best placed — and in the past haven't been properly respected — to set the right ratio themselves between fixed and variable remuneration," he was quoted as saying.

"Doing nothing is not an option. Either you set a ratio by authority, as the European Parliament wishes, or you compulsorily empower the shareholders in every enterprise."

As a global investigation into manipulation of interbank lending rates, sparked by the Barclays scandal, gathers pace, Barnier also said it was neither "fair nor appropriate" to place blame on the whole financial services sector.

"I think this shows the regulators need to work together with the appropriate laws and sanctions in such a way that it is no longer in interests even to try to do this again," he said.

(Reporting by Stephen Mangan; Editing by Richard Pullin)