Paul Tucker, deputy Governor of the Bank of England, has warned that even with tougher financial regulation ``end of the world risks ... lie within the realms of the possible``. Mr Tucker, who is widely believed to become Sir Mervyn King's succesor as Governor of the Bank of England, made clear that the UK's financial sector must undertake immediate reform, including holding more capital and controlling pay. Banks wordwide have been forced to amass capital reserves in the wake of the financial crisis of 2007 -- 09, when a number of banks were bailed out by the UK taxpayer. However, in Tucker's opinion even the current series of global regulatory standards, the so-called Basel Accords, do not provide an adequate barrier to the potential hazards. Speaking at the British Bankers' Association annual conference in London, he said, ''We are in very difficult circumstances at the moment in the sense that huge risks are behind us.`` ''There is still a tangible probability - not a high probability - that the worst may still be ahead.`` Tucker called for strong private investment, suggesting that, ''We may all be grateful that there are a few billion more in capital here and there in the banking industry, keeping banks in the private sector rather than the dead hand of state ownership`` should another crisis hit. He also called for an end to the get-rich-quick culture of the City, suggesting a pay review for junior bankers, and an overhaul in the way their bosses are paid. This would be partly in subordinated debt, linking their pay and the performance of the bank. ''Putting it bluntly, that would make it less easy to get rich quick irrespective of the quality of business transacted or the compliance culture in their part of the firm,`` he said. Having managers renumeration rely on the performance of their firm would provide ``a healthy incentive to maintain a safe and sound bank.``
Deputy Governor of the bank of England warns worst may still be ahead