The BOE has warned that regulators may need to look at new rules to control the fixed pay of bankers as well as their bonuses so that it can be clawed back in the event of wrongdoing. As Amy Pollock reports it's another attempt to show the authorities are trying to clean up banking
Less than a week after six global banks were fined $4.3 billion for price rigging in the foreign exchange markets, bankers' pay comes under attack again. Bank of England governor Mark Carney aimed fire at fixed pay levels for bankers during a speech in Singapore. SOUNDBITE (English) BREAKINGVIEWS COLUMNIST, DOMINIC ELLIOTT, SAYING; "What we've seen today is Carney saying, look, certainly in Europe we've got the situation where the EU wants to cap bonuses and the Bank of England has found that it's not great because it's going to keep overall pay levels quite high." Carney and the Bank of England are keen to ensure bankers behaving badly are held accountable - and current EU rules mean more reform is needed to make sure this happens. From 2015 bonuses can be no higher than fixed pay, or if shareholders approve, twice that level. Carney wants that taken a step further - he's backing a US proposal to bring in performance bonds for bankers, which they would forfeit to pay for any fines. Breakingviews' Dominic Elliott says this should encourage less risk-taking. SOUNDBITE (English) BREAKINGVIEWS COLUMNIST, DOMINIC ELLIOTT, SAYING; "With fixed pay you would have to pay a certain amount each month so this would be like a coupon from a bond. There might be a way to turn the coupon off or there might be a way to restrict the payment from the coupon possibly, but what we're really thinking about here is a more nuclear option. Either you get the coupon or you don't get anything at all because the bank implodes and that bond is bailed-in." Target-based bonuses encourage risk-taking and Carney says it's not just a few bad apples in the banking sector - it's the whole barrell. He says the whole system must change if people are to trust banks after a succession of scandals since the financial crisis.