Bonus-hungry bankers have been blamed for helping to contribute to the onset of the credit crunch.
Big bonuses for UK bank executives could become a thing of the past, if latest statements from the British Bankers' Association (BBA) prove true.
The industry group suggested today that long-term performance, rather than short-term profits, should form the basis of future reward for bankers. The comments follow the release of a major new report from think tank Policy Exchange earlier this week, which suggested that shareholders should be given new powers to approve remuneration advisers for banks.
It was also recommended by the report that pure cash bonuses should be switched to packages made up of convertible shares.
Seven-figure annual City bonuses for top executives have been widely blamed for encouraging the type of risky behaviour which brought about the global credit crunch in 2007. In the run-up to the credit crunch earlier in the decade, complex but high-yielding financial instruments linked to mortgages were bought up by profit-seeking bankers - before the onset of the financial crisis comprehensively devalued the securities and turned them into "toxic assets".
Figures from the International Monetary Fund released earlier this week suggest that losses from the credit crunch, largely stemming from this risky behaviour, could top $4 trillion worldwide - and that just $1 trillion of these writedowns had occurred so far.
Brian Capon, a spokesperson for the British Bankers' Association, said: "Big money bonuses have only ever applied to a very small number of staff, but we believe in proper controls and sensible measures with rewards related to long-term performance.
"The FSA has published its proposals which we support, and we would welcome the equivalent principles being recognised internationally and in Europe."
