Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Tucker Swipes at Bank Pay as Race for BOE Post Intensifies

Bank of England Deputy Governor Paul Tucker called for a strengthening of bank pay rules and backed proposals in the Liikanen report on using debt to cover bonuses to executives.

“There should also be a review of the structure of remuneration for desk-level bankers -- tying pay to the medium-term success of the firm,” Tucker told bankers in London today, according to a speech released by the central bank. “Putting it bluntly, that would make it less easy to get rich quick, irrespective of the quality of business transacted or the compliance culture in their part of the firm.”

Tucker’s comments on measures to strengthen financial-system resilience are his first in London since the close of applications for the job to replace Governor Mervyn King. His potential rivals for the position include Financial Services Authority Chairman Adair Turner and John Vickers, who leads the Independent Commission on Banking.

The need to tie bank pay to business performance “points to revisiting the terms and scope of the existing codes on remuneration of the G-20 Financial Stability Board, the European Union and, in the U.K., the Financial Services Authority,” Tucker said.

Liikanen Support

He also signaled support for proposals from a European Union-commissioned group led by Bank of Finland Governor Erkki Liikanen. Among its recommendations, the group called for a share of bonus awards to be in debt that can be written down if a lender gets into difficulties.

“Once debt holders are unambiguously exposed to loss, the authorities need to consider whether to require management to be paid to a significant extent in subordinated debt: an idea recently endorsed by the Liikanen Committee,” Tucker said. “Having managers exposed to instruments whose value depends on the survival of their firm would give them a healthy incentive to maintain a safe and sound bank.”

Tucker, who was speaking to the annual conference of the British Bankers Association, returned to the issue of pay repeatedly as he discussed ways of improving regulation.

“Higher capital requirements will affect behavior as well as resilience,” he said. “The first-round effect of higher capital requirements is probably to depress the headline return on equity. It has seemed to me quite likely that that will prompt shareholders to demand a larger share of the cake, with a smaller share going to managers.”

Tucker also said there is “still a tangible probability, not a high probability, that the worst may still be ahead.”

BOE Race

Tucker, 54, remains the favorite to succeed King, according to odds from William Hill Plc. The bookmaker now has him at 5-6, meaning a 6-pound ($9.70) winning bet would yield a 5-pound profit. The odds on Vickers have narrowed to 7-2 from 7-1 last week, making him second favorite. Turner, the previous second favourite, is at 9-2.

BBA Chief Executive Officer Anthony Browne said today that the next governor should be someone who has the interests of London as a financial center “at heart.”

The governor’s role “has been massively enhanced by the government,” Browne said on Bloomberg Television. “It needs to be someone who’s a diplomat, has the interests of London as a financial services center at heart and someone who’s well briefed in monetary policy and financial services as a whole.”

Tucker’s comments coincided with a call by Treasury Financial Secretary Greg Clark for banks to shed staff who are tainted by scandal or have failed to recognize the need for a change of culture, according to an interview in the Financial Times today. Tucker limited his own comments to ways to improve regulation rather than criticism of bank practices.

“We may not be able to abolish the occasional waves of optimism that grip humanity and the tendency to excess they set off,” Tucker said. “But we can and must dampen their effects on the financial system and economy. This must include changing the incentives that bankers face.”

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.