July 30, 2014 / 9:15 AM / 4 years ago

BoE says banker bonuses can be clawed back for up to seven years

LONDON, July 30 (Reuters) - Bankers who break the rules may have to hand back bonuses up to seven years after being awarded them, the Bank of England said on Wednesday.

The Bank had proposed in a consultation paper in March there could be clawback of bonuses up to six years from the date they were fully paid out.

Britain is introducing some of the toughest curbs on bonuses in the world at a time when bad behaviour is still being uncovered.

The rule will come into force next year.

“In order to ensure a consistent and even application of the clawback requirement across industry, the final rule requires the application of clawback only to awards made on or after 1 January 2015,” the Bank said.

Bonuses are typically paid out over three to five years and can already be clawed back during this time, but the new rule goes further to allow the clawing back of an award after it has been received.

The Bank also said on Wednesday it is now proposing that the deferred portion of a bonus should be paid over at least five or seven years, depending on seniority.

Probes into some misconduct, such as rigging of market interest rates, take several years, meaning the bankers involved may have already been paid bonuses covering the time the rule-breaking took place.

Earlier this week Lloyds was fined $370 million for rigging market benchmarks and there are allegations that banks have been rigging the foreign exchange market. (Reporting by Huw Jones, editing by Matt Scuffham)

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