BoE to pay new chief more than $1,000 a day for housing
By David Milliken | December 20, 2012 7:35 AM EST
New Bank of England Governor Mark Carney will be paid a housing allowance of more than $1,000 a day when he starts the job next year, on top of a salary that is already among the highest for a major central banker.
The Bank said on Wednesday that Carney, currently governor of the Bank of Canada, will receive a 250,000 pound a year housing allowance in addition to his 624,000 pound salary.
The payments to the former Goldman Sachs investment banker will be well above what current Bank governor Mervyn King receives - a salary of 305,000 pounds and a generous pension.
Chancellor George Osborne went to great lengths to attract Carney to Britain, changing the application process and allowing Carney to serve a five-year term rather than the eight years that had originally been foreseen.
While Carney's salary was announced at the time of his appointment, the scale of his housing allowance had not previously been made public.
"The (BoE's) non-executive directors ... confirmed their agreement to and support for an annual accommodation allowance of 250,000 pounds for the next governor and his family which had been offered to him prior to his appointment," the British central bank said in a statement.
Even without the housing allowance and taking into account the lack of a pension, Carney's remuneration is high compared to other major central bankers.
U.S. Federal Reserve Chairman Ben Bernanke gets roughly $200,000 a year. European Central Bank President Mario Draghi receives about 370,000 euros ($489,000) plus an official residence, and the Bank of Japan pays a similar amount. Carney earns around $500,000 a year at the Bank of Canada.
Carney's appointment comes at a time when Britain's economy is struggling to emerge from recession and the government is cutting most social benefits in real terms. The average full-time salary in Britain is 26,500 pounds a year, although this rises to 34,000 pounds in London.
Former Bank Monetary Policy Committee member Adam Posen has warned that Carney's salary demands risk damaging his reputation before he even takes over.
"Anyone who needed to be wooed with promises of a 60 per cent salary rise over his predecessor's, as well as London living expenses in order to have the honour of serving as governor, will have an uphill climb to be perceived as a British public servant rather than a globetrotting corporate free agent," Posen wrote in an opinion piece for the Financial Times earlier this month.
Posen himself received a standard MPC salary of 132,000 pounds including - like Carney - a 30 percent uplift in lieu of pension when he moved from the United States to Britain to serve in the three-day-a-week MPC external member role.
After tax and social security, Carney's housing allowance gives him about 11,000 pounds a month - ample for a large five-bedroom house in an upmarket district such as Hampstead favoured by foreign bankers who make London their home.
The Bank has explained Carney's higher salary by noting that the central bank will take over most of Britain's bank regulation next year, and that Carney - unlike King - will not be entitled to a pension.
"The cost to the Bank of enrolling him in the now-closed pension scheme previously available to the Governor and Deputy Governors would approximate to more than 100 percent of salary," the bank said.
"This compares with the 30 percent cash allowance in lieu of pension to which the next Governor will become entitled."
The 624,000 pound salary includes this cash allowance.
Osborne has praised Carney for helping Canada avoid the worst of the financial crisis, and playing a major role in setting the international agenda on bank regulation.
(Editing by Catherine Evans)
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