Lloyds Share News (LLOY)

The Bank of England (BoE) has decided to push ahead on its plans for super-tough bonus clawbacks on City bankers. The rules have been described as the toughest in the banking world but also "unreasonable" and even "unenforceable".A BoE consultation paper in March suggested bankers could be forced to give back cash up to six years after they had received and spent it.The Bank's Prudential Regulation Authority (PRA) has now decided to enforce these proposals, according to Sky News, with a policy statement to be published on Wednesday confirming that banks will have to amend the employment contracts of senior staff in order to implement the new rules, which will come into force on January 1st 2015.The clawback scheme will require banks to reclaim money already paid to employees even where the individuals have not been directly culpable of misconduct.The BoE would claw back bonuses where there had been "reasonable evidence of employee misbehaviour or material error", a "material downturn" in a bank's financial performance, or a "material failure of risk management" at a bank.Under current BoE powers firms can be prevented from paying unvested bonuses, called 'malus'; but the new proposals represent a further strengthening of the remuneration code. One positive for bankers is that the PRA has abandoned one part of its proposal for the new rules to be applied retrospectively, reported Sky.In its springtime submission to the consultation process, the British Bankers' Association said clawback rules would contravene employment law in some countries where UK banks operate, including Germany, France, Brazil and Mexico."Whilst clawback may be legally possible, the actual ability to enforce clawback will be dependent on the decision of a court to enforce clawback clauses in employment contracts," it added.Shares in Barclays, HSBC, Lloyds Banking, RBS and Standard Chartered all dipped slightly on the news, but all remained in positive territory on the day. OH