Mark Carney has claimed bankers’ fixed pay as well as their bonuses should be cut if they behave badly in an effort to reinforce accountability in the City.
“Standards may need to be developed to put non-bonus or fixed pay at risk,” said the Bank of England Governor.
He said international standards may have to be changed so that “excessive risk-taking and misconduct by staff can still be borne by those staff.”
Carney highlighted UK rules which ensure bonuses are deferred for three years and can be clawed back for up to seven years after payment.
But he said others — notably the European rule capping bonuses at half total pay — limited the ability to cut back basic pay.
His remarks came a week after six banks were fined £2.7 billion for rigging the £3 trillion a day foreign-exchange market after the Libor and PPI scandals.
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Carney said proposals that bankers be paid in “performance bonds” was a “potentially elegant solution”.
That would see bankers’ bonuses and possibly part of their salary paid in debt rather than shares and fines taken from that rather than their bank’s reserves.Reuse content