Deputy BoE governor warns he will take more action on bankers' bonuses

Richard Edgar

Former Economics Editor

Andrew Bailey, deputy governor of the Bank of England. Credit: ITV News

The man in charge of regulating banks has warned he will take more action on bonuses.

Andrew Bailey, deputy governor of the Bank of England and Chief Executive of the Prudential Regulation Authority, says he is sympathetic to making bankers wait between five and seven years for bonuses, double the current practice at banks like RBS and Barclays, to make sure that the money could be clawed back if it transpired a banker had made bad decisions.

Speaking exclusively to ITV News, Mr Bailey said he wanted bankers to have "skin in the game".

Making bankers understand that their remuneration is not riskless in the sense that once it is deferred, it can be taken back.

In unusually forthright language, he went on to make clear that he is alert to attempts by bankers to dodge regulation.

History tells us almost any rules you put in place, there will be activities put in place to go under, over or around them.

He added:

[We] have to have authority as an institution to go to banks at a very senior level and say "cut it out, that is not what's meant to happen. And, frankly, if you do this sort of thing then we will have to take other measures but you would be well advised not to do this sort of thing."

Mr Bailey's comments are a shot across the bow of banks which have drawn criticism in recent weeks for the level of bonuses they have awarded.

He praises progress made so far but is clear that they need to go a lot further and that the regulator will push them if necessary.

It's clear that he thinks pay, ethics and attitudes towards responsibility must change.