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Squabble over bank pay
Last week saw a bit of squabble between the City and the Bank of England over whether high pay in the banking sector is a problem or not. Bank Governor Mervyn King kicked things off when he told the Treasury Select Committee last week the way that remuneration was structured had encouraged excessive risktaking.
He said: “Banks have come to realise in the recent crisis that they are paying the price for having designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks themselves, and I would like to think that would change.”
He also warned that the high pay available in the City was having a distorting effect as it meant that bright graduates were drawn to the finance industry above other careers.
However later in the week Angela Knight, chief executive of the British Bankers Association had a dig back at King, arguing that it was not helpful to argue about pay in public:
“This is a financial services industry on which a lot of jobs are hanging. I don't think we should have the luxury of public squabbles.”
PIRC doesn’t quite follow this argument when only very recently UBS has openly admitted that pay was one of the drivers that led to its subprime related write-offs.
