City recruitment experts have slammed Bank of England governor Mervyn King’s criticism of the Square Mile’s bonus culture, accusing him of “sticking his nose where it doesn’t belong”.
King warned last week that the high bonuses awarded to staff in the finance industry were draining talent from other sectors.
He added that banks were paying the price during the ‘credit crunch’ for rewarding huge risk-taking with the promise of large bonuses, and called for City institutions to change the way they paid their staff.
But John Lacey, managing director of banking recruitment firm Longbridge Search & Selection said City bonuses were outside King’s his remit as governor of the Bank of England.
“What does Mervyn King think he’s playing at? This is a free market and if banks are to encourage and retain talent they have to reward in line with other employers both in the UK and overseas,” he said. “Banks, like any other commercial entity, have a duty to their shareholders to maximise returns, and should remunerate their staff in a way that maximises those returns. King has enough trouble to deal with without sticking his nose where it doesn’t belong.”
Michael Rendell, partner at business services firm PricewaterhouseCoopers, agreed with King that bank risk taking had played a big part in the credit crisis.
“However, the financial services is a resilient industry,” Rendell said. “Consequently levels of pay, or the attractiveness of the industry to graduates, are unlikely to decline any time soon.”