BoE warns on bank bonuses and dividends

THE BANK OF ENGLAND has warned banks they need to cut staff bonuses and reduce dividends in order to be on on their guard against "future shocks" in the economy as a result of the "severe strains" on financial markets stemming from the eurozone debt crisis.

The BoE's new Financial Policy Committee (FPC) said banks needed to save cash in any way they could to protect themselves against potential losses that could he caused by eurozone governments defaulting on their debts.

The FPC was set up earlier this year and tasked with spotting risks in the financial system and taking action to stop them causing a problem.

It said: "Banks should take any opportunity they had to strengthen their levels of capital and liquidity so as to increase their capacity to absorb flexibly any future shocks, without constraining lending to the wider economy."

Read a full report at the BBC. ·