Blueprint for future of banks being unveiled

Banks will face new scrutiny over the million-pound big-hitters on the payroll under an overhaul of pay and governance unveiled today.

Sir David Walker said banks and other financial institutions should publish the number of staff paid more than £1 million - but individuals will be able to keep their anonymity.

Chancellor Alistair Darling welcomed the final report of the Walker review of banking governance and pay and promised that the Government will move swiftly to implement Sir David's recommendations.

"Sir David's proposals are the blueprint for how banks must be run in the future," said the Chancellor.

But Liberal Democrat Treasury spokesman Vince Cable blasted the plans, saying they made "a few small steps towards transparency but nothing like enough".

In his report, Sir David called on banks to disclose details on the total pay - including salary, pension and both received and deferred bonuses - of employees outside the boardroom for the first time.

Potentially hundreds of top earners will be bracketed in bands of £1 million to £2.5 million, £2.5 million to £5 million and in bands of £5 million thereafter.

The Treasury said that draft regulations will be published in the New Year and brought into effect soon afterwards, to force disclosure for the 2010 performance year.

Sir David stressed that while remuneration was one factor in managing risk, boardroom clout, strong leadership and greater shareholder involvement were key to improving corporate governance.

The report was commissioned by Mr Darling in February this year amid concerns that unrestrained and short-term pay awards were directly linked to the excessive risk-taking at banks in the lead up to the financial crisis.

Two of his recommendations - those relating to the disclosure of high-end payments - have been included in the Financial Services Bill (FSB).

Sir David reaffirmed his position on pay and bonuses, stating that at least half of bonuses should be paid in longer-term incentives split into two payments received after three and five years.

Cash bonuses should also be deferred, paid over a three-year period with no more than one third in the first year.

Bonuses would also be subject to a claw-back provision, where funds can be returned to the firm "in circumstances of misstatement and misconduct".

Sir David also said that rewards should be calculated on "risk-adjusted measures such as economic profit rather than revenue".

He said the pay and bonus recommendations by the Financial Services Authority (FSA) were "not as tough" as his proposals, and the regulator has said it will consider including them in its Remuneration Code review next year.

Banks will not have to comply with the disclosure rules until they publish their 2010 figures, which will be released the following year.

Sir David has proposed a meatier role for the chairman, who would face annual re-election and would prioritise his or her commitment to the bank "leaving little time for other business activity".

But Mr Cable called for greater transparency.

"It (the report) only deals with remuneration over a million pounds when it should relate to all pay above the level of the Prime Minister," he said.

He said bankers, like MPs and senior BBC executives, enjoyed a taxpayer guarantee, adding: "There is no justification for withholding information on individual high-end employees from the public or shareholders."

Mr Darling said: "His (Sir David's) interim report (in July) recommended changes to control bonuses that have already become part of a global standard agreed by the G20. The Government strongly supports his recommendations and will take steps to implement them as soon as possible."

City minister Lord Myners will shortly meet with major institutional investors to discuss steps they can take to implement Walker's recommendations, as owners of UK banks.



Sir David criticised the City Minister over calls for individuals to be named - saying there was "not a shred of evidence" it would be effective in improving the running of banks.

"The idea being canvassed by Lord Myners that it is important to identify individuals who are high paid is not supported by a shred of evidence of the kind I am interested in," he told BBC Radio 4's Today programme.

"The evidence that I am interested in is to deal with one question: how will we improve the quality of governance of banks?"

Of 180 responses to his consultation, "not one of them has produced any evidence that identifying and naming people will help", he added.

"There is no evidence in all the research that's been done around the world. Of course I have looked for this," he insisted.

There was a "profound" basis for public anger over what had happened in the banking sector, he conceded, but he said it needed to be put back on "a sensible business track".

"I'm not there to deal with public anger - that's for politicians to deal with," he said.

"I'm there to improve the quality of governance of banks. I am absolutely confident that what I have proposed, if it is observed and implemented, will achieve that."

Sir David said he believes there are "well over 1,000" £1 million-plus earners in City financial institutions "and maybe many more".

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
PROMOTED VIDEO
Sport
Fans hold up a scarf at West Ham vs Liverpool
footballAfter Arsenal's clear victory, focus turns to West Ham vs Liverpool
New Articles
i100... she's just started school
News
news
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Sport
football
New Articles
i100... despite rising prices
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam