BANK GOVERNOR ATTACKS CITY BONUS CULTURE ; (1) Packages Are Wrong and Must Be Stopped, Says King(2) Pressure on Institutions after Unprecedented Attack(3) Bank Chief: City Bonus Culture Is 'Unattractive'
Prynn, Jonathan, The Evening Standard (London, England)
THE Governor of the Bank of England today made an unprecedented attack on the bonus culture in the City.
Mervyn King called on banks and other financial institutions to change the "unattractive" practice of offering huge remuneration deals to often inexperienced staff, causing some to take unacceptable risks.
He said the global credit crisis should force banks to realise "they are paying the price for having designed compensation packages which provide incentives that are not in the long run in the interest of the banks themselves".
Mr King told MPs on the Treasury select committee that he had been more impressed by the people running small firms across Britain than by London's top financial figures.
He said: "They are paid far less than people in the City. They export to maybe a dozen countries, operating with two or three thousand employees. They have a tiny, tiny number of highly qualified people working for them and the rest are ordinary, highly motivated people drawn from the community."
He told MPs that City firms lured too many of Britain's brightest young talents. Mr King said: "It is rather unattractive that so many young people, when contemplating careers, look at the compensation packages available in the City and think that these dominate almost any other type of career.
"It's not a very attractive situation that such a high proportion of our talented young people naturally look at City and think it is the only place to work in. It shouldn't be." Mr King added: "It's crucial we don't lose sight of the fact that monetary policy is there to ensure steady sustainable growth for the businesses across the country, who provide employment to the people who live there."
He is the second senior figure in a week to attack the bonus system. Last week CBI boss Richard Lambert said such packages encouraged employees to run huge risks that have contributed to the financial crisis. …