The City roundup video: Mark Carney's radical ideas on bankers' bonuses; Serco back in the news
Video: Jim Armitage provides a run-down of the day's major news from the City
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What to do about bankers' bonuses? What with forex, libor, subprime mortgages, their behaviour just seems to get worse and worse, yet the bonuses stay vast.
Bank of England governor Mark Carney recommended a couple of pretty radical ideas. First off, he repeated his derision of the European idea of capping bonuses. This will only make banks pay more in fixed salary which will then mean they can't cut their payroll costs in the lean times. Instead, he suggested that, in the event of bad behaviour, banks should claw back not just bonuses, as can currently happen, but salaries as well.
And another idea – far more radical still – is to pay bonuses out of a pot which is also used to pay fines to regulators. So, if your foreign exchange traders defraud the public and get the bank fined, it comes out of everyone’s bonus. The pot would be in the form of bonds in the company, so all the workforce benefits or is punished collectively from good or bad behaviour.
Talking of behaving badly, Serco is back in the news again today. The outsourcing giant which got caught billing us taxpayers for operating ankle tags on criminals who were, in fact, dead has finally seen its chairman walk the plank. Alastair Lyons has been in post through a host of scandals and profit warnings. Last week alone the company issued a warning about its finances which wiped 35% off the company’s shares.
Meanwhile, David Cameron was softening up the electorate for more public spending cuts in next month’s Autumn Statement. He warned readers of The Guardian about the fragile state of the global economy. Just on cue, Japan announced it had slipped into recession again.
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