Bank of England Governor Mark Carney urged bankers at a private meeting in Davos to moderate their compensation, people with knowledge of the matter said.
Carney reminded the group that he has previously stood up for the industry by opposing bonus caps in the interest of financial stability, said the people, who asked not to be identified because the meeting was private.
The talks were attended by executives including UBS AG (UBSN) Chairman Axel Weber, Standard Chartered Plc (STAN) Chief Executive Officer Peter Sands and HSBC Holdings Plc (HSBA) Chairman Douglas Flint, the people said. Anshu Jain, co-CEO of Deutsche Bank AG, and Julian Roberts, CEO of insurer Old Mutual Plc (OML), oversaw the discussion, one of the people said.
Carney told a group of British lawmakers on Jan. 15 that he agreed with a U.K. parliamentary commission’s conclusions that the European Union’s cap on banker bonuses isn’t the right way to control pay. The EU agreed last year on rules that would limit bonuses at twice bankers’ salaries, a move lawmakers said would curb irresponsible risk-taking after the financial crisis of 2008.
At the meeting, Carney and the bankers agreed that conduct is replacing capital as the key focus for regulators, the people said. Banks are battling with reputational damage stemming from the manipulation of benchmark interest rates by traders as well as allegations employees at some of the world’s biggest financial firms sought to rig key foreign-exchange rates.
Carney, a Canadian who is also chairman of the Financial Stability Board, took charge of the Bank of England in July. He is the first foreigner to run the 319-year-old institution. He echoed his private remarks during a Jan. 24 speech at the annual meeting of the World Economic Forum, in which he urged banks to change their behavior.
“Banks must recognize that only exemplary behavior can confer social license to global financial capitalism,” Carney said. “For the system to operate with integrity, penalties for misconduct cannot be seen as a cost of doing business.”
To contact the editor responsible for this story: Edward Evans at firstname.lastname@example.org