City bonuses helped cause banks crisis, says CBI chief
The director general of the CBI yesterday singled out the bonus culture that has turned thousands of bankers into millionaires as one of the main causes of the financial problems now engulfing the world's banks. Richard Lambert said the bonuses rewarded success but did not penalise failure, and that if bankers had been staking their own capital they might not have taken such big risks...If it had been their own equity at risk, things might have played out differently." The bonus culture has turned thousands of relatively mediocre performers in the banking industry into multi-millionaires, while top performers have earned vast sums. The head of Barclays investment banking, Bob Diamond, was paid £36m last year even though Barclays took a £1.6bn hit from the US sub-prime crisis.