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BoE committee warns banks to curb bonuses

The Bank of England’s Financial Policy Committee (FPC) has urged banks to curtail bonuses in order to be prepared for further financial shocks.
The newly formed committee has recommended banks strengthen balance sheets partly by ensuring any payouts to staff take into account falls in profitability.
According to the Telegraph, the FPC recommended lenders strengthen their finances by “ensuring that discretionary distributions reflected any reduction in profits”.
The FPC also took a tougher stance on bank balance sheets, suggesting they do all they can to ensure the fragile economic recovery is supported.
It said: “The committee advised the Financial Services Authority to encourage banks to manage their balance sheets in such a way that would not exacerbate market or economic fragility.”
This is a change in stance from previous comments where banks have been told to focus on building up capital buffers.

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