Britain's bankers should not pay themselves big bonuses at a time of poor share price performance, more-or-less explicit tax-payer subsidy and falling living standards for most other workers, Bank of England Governor Mervyn King said.
As Britain's banks gear up for their annual round of bonus payments, King said they should put the money aside to bolster against future financial market shocks.
"The reputation of those institutions will be affected if their senior executives reward themselves, particularly in a period when the banks, in terms of their share prices, have hardly been stellar," King told a parliament committee.
"The current squeeze on living standards has been on people who have been in no way responsible for this crisis," he added at the hearing on British financial regulation.
Bank shares have plummeted over the past year as investors worry about lenders' exposure to indebted euro zone countries and the difficulty of making money as regulation increases.
King said the best way to rein in bonuses and stem public anger at banks would be by stopping them from being "too important to fail" – and thus needing taxpayer bailouts whenever they got into serious trouble.
City A.M. Reporter