Car­ney faces BOE pay ten­sion

The Pak Banker - - COMPANIES/BOSS -

Bank of Eng­land of­fi­cials ab­sorb­ing an in­flux of Fi­nan­cial Ser­vices Author­ity staff face po­ten­tial ten­sions on pay thrown up by the merger of their in­sti­tu­tions.

The man­age­ment is con­fronting a height­ened chal­lenge in main­tain­ing mo­rale as em­ploy­ees of the UK’s bank­ing reg­u­la­tor join an or­ga­ni­za­tion where col­leagues tend to be paid less, ac­cord­ing to two peo­ple with knowl­edge of the mat­ter. For ex­am­ple, FSA de­part­ment heads earn up to 200,000 pounds ($297,600) a year, com­pared with a 158,108-pound max­i­mum for an equiv­a­lent job at the BOE.

The pay dis­par­ity presents in­com­ing Gov­er­nor Mark Car­ney with a po­ten­tial headache as he pre­pares to take on Mervyn King’s decade-long strug­gle to re­tain staff whose earn­ings can eas­ily be topped in Lon­don’s fi­nan­cial in­dus­try. The cen­tral bank is tak­ing on part of the FSA’s re­spon­si­bil­i­ties and about 1,300 of its staff as it as­sumes new pow­ers to over­see banks in a re­vamp of reg­u­la­tion. Within the FSA, the salary range for a head of de­part­ment is be­tween 95,000 pounds to 200,000 pounds, data on its web­site show. The cen­tral bank is tak­ing on part of the FSA’s re­spon­si­bil­i­ties and about 1,300 of its staff as it as­sumes new pow­ers to over­see banks in a re­vamp of reg­u­la­tion. The pay dis­par­ity presents in­com­ing Gov­er­nor Mark Car­ney with a po­ten­tial headache as he pre­pares to take on Mervyn King’s decade-long strug­gle to re­tain staff whose earn­ings can eas­ily be topped in Lon­don’s fi­nan­cial in­dus­try. “It’s a chal­leng­ing as­pect of rein­te­gra­tion,” said Simon Wells, who led an eco­nom­ics team at the Bank of Eng­land be­fore be­com­ing chief UK econ­o­mist at HSBC Hold­ings Plc in 2011. “All the BOE noises have been to soothe and re­as­sure, but how you can do that, faced with the cold hard num­bers, is an­other mat­ter.”

Within the FSA, the salary range for a head of de­part­ment is be­tween 95,000 pounds to 200,000 pounds, data on its web­site show. For a BOE di­vi­sion chief, that range is 86,689 pounds to 158,108 pounds, ac­cord­ing to a 2012 doc­u­ment. At FSA di­rec­tor level, staff earn up to 281,000 pounds, al­most as much as the 305,000pound salary com­manded by King. Salaries of BOE ex­ec­u­tive direc­tors, the level that in­cludes Chief Econ­o­mist Spencer Dale, go from 160,983 pounds to 209,967 pounds, ac­cord­ing to the cen­tral bank’s an­nual report.

A Bank of Eng­land spokesman de­clined to com­ment on pay dis­par­i­ties and the ef­fects of the merger. An of­fi­cial said in Jan­uary that the Bank of Eng­land in­tends to limit the in­crease in its wage bill to 1 per cent af­ter two years of frozen pay. That re­straint con­trasts with the in­crease in re­mu­ner­a­tion for Car­ney com­pared with King. The Bank of Canada gov­er­nor, who takes over in July, is get­ting a 480,000-pound base salary — about 57 per cent more than King’s pay — as well as a 250,000-pound hous­ing al­lowance.

“In­te­grat­ing a whole new di­rec­torate at a time when pay is frozen presents some chal­lenges,” said Robert Wood, an econ­o­mist at Beren­berg Bank in Lon­don who re­placed HSBC’s Wells at the BOE be­fore he too left last year. “There’s no guar­an­tee they’ll be paid a com­pa­ra­ble amount, as you can’t ad­just it.”

The trans­fer of staff to the BOE is part of an over­haul of bank reg­u­la­tion in the af­ter­math of the fi­nan­cial cri­sis driven through by Chan­cel­lor of the Ex­che­quer Ge­orge Os­borne. The FSA was orig­i­nally es­tab­lished by Gor­don Brown when he was fi­nance min­is­ter in 1997 as an or­ga­ni­za­tion to con­sol­i­date reg­u­la­tion of Bri­tain’s bank­ing and in­surance in­dus­tries. The change will see the FSA dis­solved and its pow­ers trans­ferred to the Pru­den­tial Reg­u­la­tion Author­ity, which will be a unit of the BOE, and the Fi­nan­cial Con­duct Author­ity, an agency to reg­u­late con­sumer fi­nan­cial ser­vices and mar­kets.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.