Bankers' pay may be cut to reflect lower industry returns, warns Bank of England executive Jon Cunliffe

Sarah Spickernell
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Bankers will have to get used to having lower pay, says Cunliffe (Source: Getty)
Bank of England deputy governor Jon Cunliffe has said bankers need to get used to lower salaries, as decreased industry returns since the financial crisis will force the UK's banks to cut employees' pay.
"It is unlikely that we will see, or want to see again, the returns on equity that we saw before the crisis. In the new world, paybills may well have further to adjust," he said at a conference in London.
The problem with leaving the situation as it is, he explained, is that bankers are currently receiving "a larger share of a smaller pie" relative to shareholders. This indicates an imminent increase in banking returns – a situation Cunliffe considers unlikely.
He pointed out that profits for shareholders in global banks constituted 25 per cent of the total paybill in 2013, which is a considerable drop from 60 per cent in 2007.
As they try to restore returns, he said it is important that banks and investors do not think in terms of 'back to the future': "With less leverage and more liquidity in banks, required returns ought generally to be lower than prior to the crisis."

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