Bankers are receiving 'Himalayan pay packages 'despite poor performance , says senior Bank of England executive
By Becky Barrow
PUBLISHED: 18:42 EST, 24 April 2012 | UPDATED: 18:42 EST, 24 April 2012
Speaking out: Bankers' pay is still at Himalayan heights while their performance is in the foothills, Bank of England executive Andrew Haldane has said
Bankers’ pay is still at Himalayan heights while their performance is in the foothills, according to a senior Bank of England executive.
In a hard-hitting speech, Andrew Haldane said top financiers were on an ‘upwards-only pay escalator’ where they cash in whatever happens to profits or their employer’s share price.
‘While bank performance has fallen off a cliff, executive pay remains close to pre-crisis Himalayan heights,’ he said in a speech published by the Bank yesterday.
Mr Haldane said the pay package enjoyed by a UK banking chief executive rose by an average of 13 per cent a year for nearly two decades prior to the 2007 credit crunch. In 1989, it was £310,000 but had shot up to £2.7million by 2007.
Mr Haldane, who is executive director for financial stability, said banks were playing a game which is ‘a case not so much of keeping up with the Joneses as keeping up with the Goldmans’.
This was a reference to the American investment bank Goldman Sachs, which has been nicknamed ‘Golden Sacks’ for the pay deals lavished on its workers.
In a separate attack, the director general of the Institute of Directors will today slam the controversial pay packet handed to the chief executive of Barclays.
The bank is facing ferocious criticism over its decision to award up to £26.6million to Bob Diamond, despite its disappointing performance.
The package includes everything from his £1.35million basic salary to a £5.75million payment toward his tax bill and the cashing in of share awards made in previous years.
Unhappy: Investors are angry at the decision by Barclays to pay out £2.15billion in bonuses last year - more than three times the £730million paid in dividends to shareholders
Investors are angry at the decision by Barclays to pay out £2.15billion in bonuses last year – more than three times the £730million paid in dividends to shareholders.
In a speech in London, the Institute of Directors’ Simon Walker will say: ‘If some banks pay three times more in bonuses to top executives than they do in total dividends to shareholders, then I think there are questions to be asked.’
FINANCE CHIEF BLASTS 'OVERPAID' BOSSES
Overpaid, reckless and incompetent financial bosses were lambasted by the City regulator yesterday.
Hector Sants, the departing chief executive of the Financial Services Authority, used his final speech to call for integrity to replace greed.
‘Should there not be some level of expectation that people entrusted with the leadership of financial services organisations ultimately are driven by the desire to do the right thing,’ he said.
‘It should not solely be about how much we earn but also how much we care for the market’s users and their well-being.’
He said ‘non-financial performance measures’ should be reflected in pay.
Mr Walker said he was pleased to see ‘encouraging’ signs that shareholders are taking a more activist approach and voting against pay deals which are excessive.
A recent report from the High Pay Commission also attacked the ‘excessive’ pay packages given to company executives, which it said had had a corrosive impact on the economy.
Within ten years, it predicts the average boss of a FTSE 100 company will be paid a record of nearly 215 times more than the average worker.
It concluded: ‘The public is rapidly running out of patience with a system that allows those at the top to enrich themselves while everyone else struggles to make ends meet.’
Last night a spokesman for the British Bankers’ Association said: ‘We are now committed to ensuring that the pay structures in the industry reflect the long-term health of the organisation that the bankers work for.’
Mr Haldane’s speech was delivered in Berlin earlier this month.
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