Bankers fury at attack on bonuses

Bankers in Britain have launched a counter-attack against the Bank of England's Governor, Mervyn King, after his criticism of the industry's multimillion-pound bonuses.

The British Bankers' Association told Mr King not to comment publicly on City pay after he criticised salary packages.

Mr King said financial institutions needed to stop encouraging excessive risk-taking with huge bonuses, blaming banks and their compensation culture for the credit crunch.

In his most outspoken attack on the search for profits and multimillion pound salary packages awarded in the City of London, Mr King said banks had thrown caution to the wind and must not return to the easy lending practices of the last few years.

He said: "Banks have come to realise in the recent crisis that they are paying the price for having designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks themselves, and I would like to think that would change."

While the BBA called his comments 'unhelpful', UBS admitted this month that its bonus structure contributed to its £18 billion in sub-prime losses.

Financial sector remuneration has become a hot topic for shareholders, unions and politicians in the wake of the subprime crisis as banks reporting multi-billion dollar losses are still paying out multimillion dollar bonuses.

London is Europe's leading financial centre and employs hundreds of thousands of people. Some £7 billion in bonuses were estimated to have been paid in the first few months of 2008.

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