Arab Today, arab today bank of england mulls clawback of bankers\ bonuses
Last Updated : GMT 19:52:21
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Bank of England mulls clawback of bankers\' bonuses

Arab Today, arab today

Arab Today, arab today Bank of England mulls clawback of bankers\' bonuses

London - AFP

The Bank of England said Thursday it was consulting on recovering bonuses paid to bankers in the event of misconduct, with such a mechanism possibly in place as soon as 2015. The BoE said the move was aimed at maintaining financial stability after banks were accused of reckless behaviour for paying some staff huge bonuses for risk-taking in the run-up to the global financial crisis of 2008. “We have an objective to ensure the safety and soundness of the firms we regulate and we won't allow remuneration schemes to exist that encourage behaviour likely to jeopardise financial stability," said Andrew Bailey, chief executive of the BoE's Prudential Regulation Authority that supervises Britain's banking sector. "The policy we are consulting on will ensure bonuses can be clawed back from individuals, where they have already been paid, if it becomes apparent they have put the stability of their firms at risk or engaged in inappropriate actions. "This will provide a clear message to individuals of what is expected from them and the consequences of not acting properly,” Bailey added in a statement. The BoE said that it already has powers to require firms to stop payment of unvested bonuses. "Proposals in today’s document would represent a further strengthening of the remuneration code," it noted. Under its consultation, which will last two months, the BoE said vested remuneration would be clawed back if "there is reasonable evidence of employee misbehaviour or material error". Clawbacks would occur also if a firm suffered "a material downturn in its financial performance or... suffers a material failure of risk management". It added that clawback should not be limited to employees directly culpable of malfeasance. "For example, in cases involving a material failure of risk management or misconduct, firms should consider applying clawback to those employees who could have been reasonably expected to be aware of the failure or misconduct at the time but failed to take adequate steps." The proposed rules would come into force from January 2015, the BoE said. "Clawback could be applied to awards made before that date but which vest after that date, subject to a six year time limit," it added.

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