Carney backs big bonuses for top successful bankers
SENIOR bankers should get big bonuses as long as the money is spread out over several years and can be clawed back if they make mistakes, Bank of England governor Mark Carney said yesterday.
His argument runs counter to much of the criticism of high pay for bankers, as he favours the payouts when they tie staff to the long-term fortunes of their firms.
“With compensation of bankers, a substantial proportion, and an increasing proportion as they become more senior and as they take more risk, should be held back. You can call it a bonus but we look at it differently,” Carney told the Andrew Marr show.
“It should be held back, deferred, for a very long time, and there should be the ability that the firm will take back that compensation if the individuals are subsequently found to have taken risks that weren’t well understood, or if there are conduct issues, unfortunately we have seen far too much of both.”
Carney also used to the interview to confirm that the Bank of England will only start to increase interest rates when a range of measures suggest the economy is operating at closer to full capacity.
“The path of monetary policy, the path of interest rates is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending, will we make adjustments,” he said. “We can responsibly take our time and only adjust interest rates once more slack has been cut.”
Carney also said he was concerned about the UK’s history of booms and busts in house prices, but that the government scheme to aid buyers, Help to Buy, was not a major factor in boosting prices for now.
“It’s still pretty small, it’s all outside of London, it’s for lowerpriced houses, as a whole it’s mainly with first-time buyers, so it’s not driving the housing market, but we have a responsibility to watch it,” he said.