Calls for 'B20' forum to link global business and banking leaders

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The Independent Online

British business leaders here in Davos want to see the formation of a "B20" of global business and banking bosses to develop a dialogue with governments over financial reform, writes Jeremy Warner.

The idea was floated by the chairman of HSBC, Stephen Green, and has the strong backing of Sir Martin Sorrell, the chief executive of the advertising giant WPP.

Conscious that such a committee might be seen as just another business lobby group, Mr Green believes the initiative has to come from the G20, with perhaps two business leaders nominated from each country to advise on regulatory and financial reform.

Mr Green's primary concern is that past attempts at regulatory reform, such as the fair-value accounting and Basel 2 capital adequacy rules, have only succeeded in making the system worse, rather than better. Both sets of rules had made the system even more cyclical than it needed to be, rather than encouraging long-term and responsible risk-taking. New clauses in the Basel 2 rules which Europe is enacting over the next few months would further limit the ability of banks to lend into the downturn, Mr Green said.

Mr Green's comments were echoed by Marcus Agius, chairman of Barclays Bank, who said that some parts of the regulatory system, while well-intentioned, had only made things worse and more cyclical than they needed to be.

Mr Green also believes that the B20 could become an important force for the development of socially responsible values in business and finance.

Both Mr Green and Mr Agius acknowledged that remuneration in the finance sector had been out of control and had become unduly driven by excessive, short-termist risk-taking with banking capital.

Mr Green said that the "huge and growing disparity between different levels of income" had contributed to the collapse of trust in the banks. Mr Agius insisted that reward for wealth creation was justified, but too many bankers had been excessively paid "just for turning up".

Separately, Gordon Brown reiterated that nationalisation was not the solution to the banking crisis. However, the Prime Minister added that it was essential that banking became more socially responsible.

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