Bankers Compensation the Latest Crisis in the City
Are deep cuts in the pay of bankers going to be one of the enduring legacies of the credit crisis? I have not taken the possibility of massive pay cuts very seriously, but across the pond it is picking up steam, as they re-think the reward system that certainly seems to favor short-term risk taking:
The structure and scale of bankers’ bonuses will be taken into account by regulators when they assess banks’ exposure to financial risk.
Hector Sants, chief executive of the Financial Services Authority, told a City dinner on Tuesday night that although the regulator would not dictate pay levels, it would consider the implications of remuneration structures when judging the overall risk of individual institutions. “We will do this with increasing intensity,” he told the Investment Managers’ Association.
Mr Sants later told the Financial Times: “When we look at risk, we should be looking more than we have in the past at compensation structures that encourage risk-taking.” FT
With bailouts the flavor of the month on both sides of the Atlantic, regulators have more skin in the game, and are likely to continue to poke in the dark recesses, and even orifices, of investment bankers everywhere. The barn door is open, and not even Katie can bar it now.
The banker are sure to whine, but if they need to assign blame they must merely look in the mirror whilst they shave.
Get ready for the next swoon in this chart
City watchdog to focus on bankers’ bonuses
Financial Times
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