Billions in banker bonuses paid 'by mistake' - papers

Billions of pounds of banker bonuses may have been paid out "by mistake" as a result of miscalculations resulting from Britain's flawed accounting rules.

The House of Lords Economic Affairs Committee, which is investigating the role of auditors in the financial crisis, has been told the controversial International Financial Accounting Standards (IFRS) had allowed banks to hide risks so that profits and bonuses were inflated, the Telegraph reports.

Iain Richards, of Aviva Investors, told the Lords the IFRS system of auditing the banks had had "a material cost to the taxpayer and to shareholders" because "as a result dividend distributions have been made and bonuses have been paid that were imprudent". Read more here

Meanwhile, Lloyds Banking Group boss Eric Daniels, who is set to stand down in March, could receive a bonus of around £2m this year, according to the BBC. 

Eurozone 'needs bigger bailout fund' - papers

EU leaders have called for more effective action to defend the euro by increasing the hundreds of billions in the eurozone's bailout fund and extending the fund's scope to include bond-buying and short-term credit for countries in distress.

While the French and German governments have dismissed the calls as unnecessary, José Manuel Barroso, president of the European commission, is insisting on agreement to boost the bailout fund within three weeks, the Guardian reports.

Although Portugal has passed a significant test on the bond markets by raising €1.2bn at a less stringent than expected rate of 6.716%, commission officials are insisting persuasive action is needed to counter market attacks on the weaker members of the single currency. Read more here

World 'unable to handle any future shocks'

The ability of governments to respond to future shocks is at "critically low levels" in the wake of the credit crisis and unprecedented peacetime debts.

A report from the World Economic Forum (WEF) predicts a sudden drop in asset prices, a sovereign-debt default, or currency swings could have disastrous consequences, according to the Independent says.

Its warnings come as the World Bank releases new forecasts predicting a return to economic growth levels that would have been expected without the financial crisis, but with the recovery in the most developed nations still only "tentative". Read more here