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Bank bonuses caused credit crunch, says King

Exorbitant bonus structures are responsible for the credit crunch, says Mervyn King.

The governor of the Bank of England says incentives provided by banks have encouraged employees to take unnecessary risks on complicated financial instruments.

The governor says bonuses were tied too directly to short-term outcomes rather than the long-term results of investments.

King says: “Banks have come to realise they are paying the price for having designed compensation packages that provide incentives that are not in the long-run interests of the banks themselves.

“We must make sure it doesn’t happen again. I think all of us – and I do not exclude the Bank in this – have learnt a lot of lessons from the last nine months.”

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Apart from the fact it means I don’t have to think of anything else to write, I think it is important to reiterate these points in the ever-changing market we now face….

Packager insures proc fees

Just Mortgage Packaging has taken out an indemnity insurance policy to reassure brokers their proc fees are safe in its hands.The Horsham-based packager says it has taken out the policy, which is underwritten by Lloyds of London, to assure brokers their money is safe be-cause some packagers have recently gone into administration while owing brokers […]

Banks could help out building societies

The Bank of England’ s Special Liquidity Scheme which allows banks to swap temporarily their mortgage-backed and other securities for UK Treasury Bills, does not appear to be very helpful to the majority of building societies but apparently the big players may come to their rescue.

Barclays director to advise FSA

The Financial Services Authority has appointed Naguib Kheraj, former finance director at Barclays Group, as senior adviser to its Supervisory Enhancement Programme. The scheme will implement the recommendations of the Northern Rock inquiry that criticised the regulator’s handling of the crisis.

Health - thumbnail

Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.

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