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FSA: We'll fine any bank chiefs who go back to bonus culture
Nicholas Cecil, Chief Political Correspondent21.07.09
City watchdogs have fired a warning shot at banks over the return of lavish bonuses for staff.
Hector Sants, the chief executive of the Financial Services Authority, has told bank chiefs that they risk heavy penalties by offering pay packages which include guaranteed bonuses of more than a year's pay.
Chancellor Alistair Darling is urging the FSA to step in after City institutions signalled that big bonuses were making a comeback, less than a year after the financial system came close to meltdown.
Eyebrows were raised at the Treasury after it emerged that 5,500 London-based staff at Goldman Sachs were in line for bonuses of an average £500,000, after the Wall Street giant announced £2billion in profits for the second quarter.
The FSA's action is seen as the first major move in attempts to stop the return of bumper bonuses which encouraged high-risk banking practices.
Mr Hants has written to 40 chief executives in the financial industry, stressing that using long-term guaranteed bonuses to recruit staff may break the FSA's new pay code, expected to come into effect next year.
"It is essential that the market does not revert to remuneration practices that would be incompatible with our intended outcomes," he wrote.
Reader views (2)
Surely as the majority shareholder in banks the Government does not need the FSA's help to restrict pay. The Ministers responsible must have demanded some operational control for the massive capital injections. Oh they didn't? Typical imcompetence. The problem was the Governments ham-fisted response not the bankers receiving performance bonuses.
- Mark, London
Could we persuade one of the Papers to do a series of articles namimg and shaming the Bankers whose huge bonuses and poor performance cost the Taxpayer so much? Perhaps some of the Public reaction to MP's perks would be repeated for the Bankers with far more reason. It seems that being anonymous suits the Bankers. They don't like the idea of being exposed.
- R Race, Ealing England
