Bank of England tells bankers to get used to lower pay

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Banks may have to cut pay to reflect lower industry returns since the financial crisis, a senior Bank of England executive has warned.

Bank of England deputy governor Jon Cunliffe said banker pay had failed to adjust sufficiently since the crisis.

"It is unlikely that we will see, or want to see again, the returns on equity that we saw before the crisis. In the new world, paybills may well have further to adjust," he said.

He was speaking at a London conference.

Mr Cunliffe said banking staff had been receiving "a larger share of a smaller pie" relative to shareholders.

He warned this suggested that returns in banking were likely to increase in the future, a situation he thought was unlikely.

At global banks, profits attributable to shareholders averaged 60% of the pay bill in 2007, but by 2013 this had fallen to around 25% of the pay bill, he said.

It is important, he said, that in seeking to restore returns, "banks and investors do not think in terms of 'back to the future'".

He added: "With less leverage and more liquidity in banks, required returns ought generally to be lower than prior to the crisis."

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