Following the lead of officials in the US and Europe, Bank of Canada Governor Mark Carney fired a warning shot across the bow of the country’s largest banks. Carney, in a speech in Montreal Monday morning, warned bankers that he fully expects promises made to secure cash during the height of the liquidity crunch to be honored now that the banks are on more solid footing. Key pledges include a vow to increase capital reserves to deal with future difficulties and a more realistic compensation structure based on longer-term goals.
“The industry should be in no doubt that capital requirements are going up,” Carney said.
“Moreover, we all agree that bonuses should be tied to long-term performance. In their communique, the G20 leaders urged firms to implement sound compensation practices immediately.”
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