Executives and staff of the Financial Services Authority (FSA), the chief City regulator, are in line for up to £33 million of bonuses and pay top-ups this year, The Times reports.
The FSA, which has been severely criticised for not doing enough to anticipate the banking crisis, said that it needed to introduce a new reward strategy to improve the performance of its 2,800 employees.
Plans for potentially bigger bonuses and a new pay top-up scheme - described by the FSA as "a talent management initiative" - come just 24 hours after Sir James Crosby, its deputy chairman, resigned amid allegations that when he ran HBOS he sacked a senior whistleblower who was worried that the bank took excessive risks.
The FSA is raising staff bonuses from a maximum of 12.5 per cent of pay to 15percent, which would require it to pay out up to £23 million this year. It is also earmarking an extra £10 million to give pay rises to staff whose pay was "out of kilter" with market rates.
The plans for higher pay were revealed as the FSA announced proposals for a £117 million increase in its budget to improve regulation and bank supervision. Bonuses for the top three FSA officials, including Hector Sants, the chief executive, are to be decided next month by the FSA board remuneration committee.
In 2007-08, Mr Sants was paid £662,000, including a £114,000 bonus.
American banking chiefs are facing the biggest, most nail-biting assessment of their lives: a series of financial "stress tests" by teams of government experts to see whether their institutions can be salvaged, says The Guardian.
Saving the banking system and boosting the economy is the first big challenge for Barack Obama's new administration.
Forensic inspectors from at least four federal agencies will soon begin combing through asset registers, trading ledgers and balance sheets at the 18 or so biggest US banks. Line by line, the inspectors will tot up billions of dollars in liabilities.
"In a lot of cases, they're clearly bankrupt," said Dean Baker, co-director of the Centre for Economic and Policy Research.
"Citigroup and Bank of America have a cesspool of bad assets and without government support, they probably would have failed. You have to ask yourself what we're trying to do here."
European finance ministers are planning to round on Alistair Darling and tell him to bring the pound back under control, in what many fear could represent the opening salvo of a "currency war", according to The Daily Telegraph.
French and German ministers are expected to confront the Chancellor over sterling's weakness at the opening dinner for the Group of Seven finance summit in Rome tonight.
They will ask him to consider direct action to increase the value of the pound, which has suffered its worst devaluation since at least the final breakdown of the Bretton Woods agreement in the early 1970s.
It came as the pound dropped further against a range of currencies, following the Bank of England's unexpected acknowledgement earlier this week that it plans to start buying gilts imminently as part of its quantitative easing efforts.
Sterling fell more than a cent against the dollar to $1.4248, although it did strengthen marginally against the euro.
The Rome G7, which will mark US Treasury Secretary Tim Geithner's first international outing, is likely to focus not merely on the financial crisis but on the growing gaps opening up between different currencies.
In particular, companies in Europe have complained that the pound's recent devaluation has left their exporters suffering, as businesses are switching to cheaper British goods.IFAonline
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