BBA calls for "proper" and "sensible" bank bonus system

Bank bonuses should reward long-term, rather than short-term performance, the British Bankers’ Association (BBA) said today.

The new analysis follows recent controversy over bonus pay in the financial services sector - which some analysts have seen as a contributory factor to the onset of the credit crunch.

Banks purchased complex high-yielding financial instruments linked to mortgages in the boomtimes earlier this decade, exposing themselves to considerable risk.

The securities were then comprehensively devalued in the credit crunch, turning into ’toxic assets’ which clogged banks’ balance sheets and forced some into seeking state assistance.

Brian Capon, a spokesperson for the BBA, 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 comments echo points made in a report on bank bonuses from think tank Policy Exchange, released earlier this week.

In the document, it was proposed that cash-only rewards be phased out.

Greater shareholder power in the selection of remuneration advisers at banks was also recommended.ADNFCR-2318-ID-19135773-ADNFCR