FSA TO INFLICT TOUGHER CURBS ON BANKERS' BONUSES
The Financial Services Authority is looking to inflict tougher curbs on bankers’ bonuses
By Andrew Johnson, Deputy City Editor
FEW hearts are likely to bleed at the news the Financial Services Authority is looking to inflict tougher curbs on bankers’ bonuses.
Nor will many feel much sorrow for the 2,500 hedge funds, building societies, asset managers and other investment firms who find themselves swept up in the clamp down, on top of the 26 covered by the current rules, to comply with European Union legislation finalised earlier this month.
Among other changes the City watchdog wants, banks and other companies will be forced to defer at least 40 per cent of bonuses to executives for at least three years. If the bonus is above £500,000, the amount deferred will rise to 60 per cent.
At least half the bonuses must be paid in shares, with upfront cash limited to 30 per cent. The FSA is also looking to end the practice of offering “guaranteed” bonuses for more than a year, a common tactic. The plans are likely to result in the usual squeals about London’s position as a leading financial centre being threatened.
But there is no reason why this should be so. The rules are designed to prevent bankers receiving large sums up front for activities that one day result in huge amounts of value being destroyed. There will remain bankers rich as Croesus by any normal yardstick and rich enough to enjoy the lifestyle London can offer compared with, say, Zurich.
Deferring the bonuses simply defers payday until performance is proved. Then there is the infrastructure and range of support services, such as lawyers and accountants, based in London, built up over many decades and unrivalled outside of anywhere apart from New York.
London will remain a leading financial centre, even in the face of rising competition from cities such as Shanghai.
There’s no need to feel sorry for the bankers.
MECCA Bingo customers are on the up for the fi rst time in 10 years, lured in by better games and waitress service.
All credit to owner Rank for turning round a business that has had serious problems over the past few years. Let’s hope it’s eyes down for further growth.
