Mervyn King launched an unusually fierce attack on the bonuses paid to City bankers on Tuesday and vowed to use his second term as governor of the Bank of England to curb the excesses he said had helped provoke the credit crisis.

Mr King, giving evidence to the Commons Treasury committee, said banks were paying the price for compensation packages that created incentives that were not in their own long-term interests. “I would like to think that would change,” he said, adding it was “unattractive” that so many young people were lured to the City by the prospect of big pay packages.