Banking in Britain: A New Dawn for Bonuses

The Bank of England is revising rules to allow senior British bankers to access their bonuses sooner, reducing deferral from eight to five years. This move aims to enhance competition and position London as a more attractive financial hub. The FCA is also shifting towards more transparent company investigations.

In a major shift, the Bank of England has announced plans to allow senior British bankers to receive their bonuses three years earlier, shifting the deferral period from eight to five years. This proposal, unveiled by BoE Deputy Governor Sam Woods, aims to boost competition and maintain London's allure as a global financial hub.

Historically, deferring bonuses was meant to discourage excessive risk-taking following the 2007-2009 financial crisis. However, Woods argues that extended deferral periods could now harm Britain's financial competitiveness. Under the new plan, bonuses could begin to vest on a pro-rata basis after the first year.

The Bank's initiative aligns with the UK regulators' aims to balance rule-making with economic growth promotion. Meanwhile, FCA chief Nikhil Rathi plans to introduce greater transparency in regulatory investigations, proposing to disclose ongoing probes if it serves the public interest, further pushing for transparency and accountability.

(With inputs from agencies.)