A raft of major overseas banks with UK operations have agreed to back tougher international rules to curb pay and bonuses, it was announced today.
The Treasury said 11 banks including Bank of America, Goldman Sachs and JP Morgan - which today reported a 581% surge in third quarter profits - had signed up to the G20 recommendations drawn up last month.
The move follows a series of meetings held by City minister Lord Myners with international banks as part of efforts to prevent a return to the pre-crisis excessive bonus culture as the US bank reporting season gets under way.
Today's deal with international banks is set to see the firms rein in their City remuneration perks, aligned with the G20 reforms to include so-called clawback clauses and to spread out bonuses over three years or more.
Britain's five biggest banks signed up to the new G20 agreement last month, but there were concerns over support from international groups which have a presence in London.
The Treasury said eight banks - Bank of America Merrill Lynch, Citigroup, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, Nomura and UBS - had confirmed their commitment to the Financial Services Authority's pay rules, which come into force on January 1, and their full support for the G20 agreement.
Germany's Deutsche Bank and French groups BNP Paribas and Societe Generale also said they would stick by the G20 reforms and would voluntarily comply with the FSA code, according to a statement today.
Lord Myners said: "I am pleased that the most significant banking institutions operating in the UK have moved quickly and are supporting our implementation of the agreement reached on bank remuneration at the G20, and this reinforces the standard we have set for other financial institutions and countries to follow.
"I will be writing to the chairs of their parent companies' Remuneration Committees to share with them the outcome of this meeting."
In a joint statement, the 11 banks added: "In a competitive and global business, banking remuneration must be consistent with effective risk management and there must be national and international consistency on this issue.
"We welcome the global nature of the G20 remuneration reforms and will work with the FSA and regulators in our home countries in adopting the reforms, recognising that all G20 nations have also committed to their implementation to ensure a level playing field."
There have been mounting concerns that a recovery in bank earnings will herald a return to mega City pay deals.
This view was reinforced by news of JP Morgan's leap in third quarter profits to 3.6 billion US dollars (£2.3 billion), with Goldman Sachs expected to follow with a similar bumper result tomorrow.
Bank bonuses are determined at the end of the year based on annual performance, although the pay-out season is not until January.
Goldman Sachs staff are reportedly on track for £14 billion in pay and bonuses this year.Reuse content