Bank investigates City bonus risks

The Bank of England is financing an investigation into the impact of large profit-related bonuses on City traders' propensity to take excessive risks on behalf of their companies. The study, by the London School of Economics, is expected to be completed by the spring.

The Bank's supervision department has for several years been asking banks with large proprietary trading operations to analyse how the method of remuneration for staff affects the riskiness of their trading. A Bank spokesman said the new study was looking at the economic implications.