Finance & Business World

The Bank of England hired the most staff in more than two decades last year and raised the budget for its bonus pool as the financial crisis stretched resources and stressed out officials.

The number of full and part-time employees rose by about 6 percent in the year to February to 1,857, the first “significant” addition since 1987, the U.K. central bank said in its annual report published in London today. It also lifted the budget for the bonus pot to 8.1 percent of salaries from 7 percent in the previous year.

“The increase in staff numbers was due to the extra workload brought on by the bank’s new responsibilities,” the bank’s non-executive directors said in the report. “In recognition of the exceptional workload over the past year, the bank increased its bonus and special payments budget.”

The Bank of England grappled with the near-collapse of HBOS Plc and Royal Bank of Scotland Group Plc, brought interest rates to a three-century low and began unconventional policy measures to fight Britain’s worst recession for a generation. The staff increase contrasts with the rest of London’s financial services industry, where companies may cut thousands of jobs this year.

The directors have “been concerned about pressures on staff, particularly on key individuals in the markets and banking areas” and have raised questions on whether “actions were being taken to recruit and redeploy staff and to manage the risks associated with the exceptional levels of stress in many parts of the organization,” the report said pay day loan lenders. The committee said it’s satisfied that the issues are being managed effectively.

Job Cuts

Financial services companies may cut about 29,000 jobs this year before employment growth resumes in 2010, the Centre for Economics and Business Research forecast on April 20.

The Bank of England’s balance sheet more than doubled to 147.9 billion pounds ($226 billion) as of the end of February from 72 billion a year earlier as loans and advances to banks increased. The central bank expanded its three month money- market operations and introduced dollar auctions to improve the flow of credit in the economy.

King’s salary rose 2.5 percent to 297,920 pounds, while pay for former deputy governors Rachel Lomax and John Gieve increased by the same amount, to 246,338 pounds. Charles Bean took over from Lomax on the same salary, the report said. None received bonuses.

The bank’s four external members of the monetary policy committee, who serve three-year terms on Treasury appointment and work on a part-time schedule, were paid 96,478 pounds and an extra 30 percent to make up for exclusion from the bank’s pension fund.

King may seek to consult more with bankers as part of an enhanced communication strategy, according to the report.

“The governor’s program of regular contacts with financial sector participants will be expanded over the coming year,” the report said.

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