The Bank of England has warned lenders it is considering changes to the way bonuses are measured to make it far harder for investment bankers to justify their multi-million pound awards.
The threat of a bonus crackdown was made in the Bank's Financial Stability Report, according to the Daily Telegraph.
It said the Financial Policy Committee (FPC), which has the power to set new rules, had "noted that performance metrics, such as return on equity targets, that take little account of the risks taken to achieve them could be distorting incentives".
It added: "Given the importance the committee attaches to this issue, it agreed to consider it in greater depth at a future meeting. It would consider, among other things, the extent to which such performance metrics influence ...remuneration."
At least two leading members of the FPC - Robert Jenkins and Andy Haldane - have been campaigning for change for some time, endorsed by the Bank.
Jenkins and Haldane want bonuses measured against return on assets (RoA), which adjusts for risk, rather than the current method of return on equity (RoE) which does not.
"While the risks have typically been borne by wider society, the returns have been harvested by bank shareholders and managers," Haldane has said.
According to his analysis, the effect on bonuses from switching targets would potentially be huge.
Between 1989 and 2007, in which time there was "increasing focus on RoE as a performance target", the average pay of the top seven US investment bank bosses rose from $2.8m to $26m. If their performance had been linked to RoA, it would have increased to just $3.4m.
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