Page last updated at 10:32 GMT, Thursday, 25 February 2010

Bankers still overpaid, Morgan Stanley's Mack says

john mack
Mr Mack said the government would take action if bankers did not

The chairman of US bank Morgan Stanley, John Mack, has said that bankers are still paying themselves too much.

"I still don't think the industry gets it," Mr Mack said.

Banks are reforming pay by focusing too much on structure - such as deferring bonuses to later - rather than the huge amounts being paid out, he said.

Earlier this week, the New York state Comptroller said that Wall Street banks may have paid more than $55bn in bonuses last year.

"If we don't do something, the government will do something" on pay, Mr Mack said.

The issue of bonuses has become a huge political issue on both sides of the Atlantic as many of the banks that are paying bonuses to staff made losses during 2009 and were bailed out by taxpayers.

On Thursday, Royal Bank of Scotland - which is 84%-owned by the UK government - said that it made a loss of £3.6bn ($5.5bn) in 2009, but will pay £1.3bn in bonuses to staff.

Mr Mack - speaking at Queens University in North Carolina - cited the example of a trader that recently left Morgan Stanley.

The 28-year-old trader's unit had earned as much as $400m for the bank.

Morgan Stanley had offered to pay him $11m, but the trader left to join a hedge fund that paid him $25m, Mr Mack said, according to Bloomberg News.

Morgan Stanley reported record losses in 2008 and survived the financial crisis because of government aid.

Mr Mack recently stepped down as chief executive but remained chairman.

He has not taken a bonus for the past three years.

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