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By Huw Jones
LONDON, March 11 (Reuters) - The Bank of England isscrutinising allowances awarded to top staff by banks in aneffort to establish whether they are a covert way of avoiding anew European Union cap on bonuses, a senior official at thecentral bank said on Tuesday.
From next year bankers' bonuses in the 28-country EU can beno higher than fixed salary, or twice that amount if a bank'sshareholders give their approval. However, HSBC, Lloyds and Barclays are all considering giving topstaff monthly or quarterly allowances to boost fixed pay.
About 80 percent of the bankers affected by the rule arebased in London.
The Bank of England is toughening its stance on excessivecompensation in response to public and investor criticism of abonus culture blamed for contributing to the financial crisisand has asked its supervisory arm, the Prudential RegulationAuthority (PRA), to study the proposed allowances.
"We haven't looked at role-based allowances in enough detailto be able to give a house view on whether they comply or not.Our job is to work with the European authorities," KatharineBraddick, a director of policy at the PRA, told reporters on thesidelines of a financial conference.
The European Parliament, meanwhile, is considering whetherits bonuses rule needs tightening and the European BankingAuthority has asked the PRA to confirm whether proposedallowance payments comply with the cap.
Braddick said that the PRA will have to gauge whether therole-based allowances are what they say they are or merely ameans to skirt the bonus cap.
The Bank of England is due to publish a consultation onThursday on a proposed rule to allow the clawing back of bonusesup to six years after they are paid, Braddick said.
The change would require banks to rewrite staff contractsfrom January 2015.
The aim is to punish bankers whose behaviour is later provento have put a bank at severe risk or whose conduct turns out tohave fallen short of the standards required.
Bankers would be legally liable to return the money, ifrequested, even if they have left the bank.
"You can't claim you've never had it. If you've had it andyou've spent it and you can't get anything back, then you haveto think about how you would liquidiate some of your otherassets," Braddick said.
Another measure likely to be considered is a lengthening ofdeferral periods for bonuses. Most of a bonus is deferred forthree to five years, but some UK lawmakers have called for thisto be extended.
Braddick said the PRA believes there is a strong case forlonger deferrals.
There is already a rule to allow a bank to claw back thoseparts of a bonus a banker has yet to receive.
