“Denmark’s financial watchdog is urging banks to put in place better checks and balances to prevent excessive bonuses it says may spur greater risk-taking.”

“The warning follows a decision by the Financial Supervisory Authority this month to criticize Danske Bank A/S (DANSKE) for having a remuneration policy for key staff it said encourages “more risky dispositions” by offering bonuses as high as 200 percent of base pay.”

“How banks reward their employees has come under greater scrutiny as the gap between financial industry pay and salaries earned elsewhere widens. Danish banker pay gains outpaced increases in other industries as much as fourfold from 2004 through 2008, according to a government-commissioned study into the causes of the nation’s financial crisis, published in September.”

“We’re tracking this as we recognize pay is making a difference to what people do at work,” Julie Galbo, the regulator’s deputy director general, said by phone. The FSA commented on Danske following an inspection in November. “Remuneration is very important and particularly who you pay. We want banks to consider who they’re paying and what they get.”

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Read full Bloomberg article here.