Bank compensation should end excessive risk-taking

The British Bankers Association has issued a response to the PRA/FCA’s announcement on remuneration and clawbacks…

Simon Hills, BBA Executive Director, said banks wanted compensation that rewarded long term performance and discouraged excessive risk-taking and appropriately aligned risk with reward.

“It is right and proper that designated senior managers should be subject to a further 3-year clawback period where there are outstanding internal or regulatory investigations at the end of their normal 7-year deferral period,” said Simon.

“We also think it’s right that the PRA has recognised that more junior material risk-takers do not need to be subject to a 5-year deferral, but that they should instead be subject to between three and five years. This is in line with the principles already set out in the Capital Requirements Directive.”