HM Treasury
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Government launches consultation to improve bank bonus transparency
The Government has launched a consultation that will help tackle unacceptable bank bonuses by improving pay transparency at large banks, Mark Hoban, Financial Secretary to the Treasury, has announced today. The proposals would extend transparency arrangements at large banks by requiring the eight highest-paid non-board executives to disclose their remuneration arrangements. Improving transparency for senior executives who manage risk will help provide shareholders with more tools to hold senior management to account.
These proposals would improve transparency at an estimated 15 banks, including the largest UK banks and the UK banking operations of large foreign banks.
Today’s consultation forms part of the Government’s ongoing commitment to introducing the most comprehensive disclosure regime of any major financial centre, and follows a number of significant steps that have already been taken to reduce excessive risk-taking and improve corporate governance.
Mark Hoban said:
"The banking system cannot reward employees for short-term performance while leaving investors exposed to long-term risk. We want shareholders to hold banks to account for their bonus structure, which is why we’re taking action to make top-level pay more transparent. We want the most transparency for those with the greatest responsibility.”
Notes for Editors
1. The Government is today consulting on a proposal to require
the disclosure of remuneration by the eight highest-paid
executives with responsibility for managing risk at the largest
banks operating within the UK. The disclosures will not include
executives on the main board of a UK bank, as their remuneration
agreements must already be disclosed. The consultation can be
found here: http://www.hm-treasury.gov.uk/consult_merlin_remuneration_disclosure.htm
2. Although banks will not be required to publish the name or
title of the recipient, disclosure must include the pay of each
individual, split up into fixed, variable, deferred variable, long
term incentive scheme vestings, pension accruals, joining benefits
and severance benefits.
3. In February 2011, the Government
announced an accord with the major UK banks under Project Merlin.
As part of this, the Government indicated that it would consult on
a mandatory requirement, from 2012, for large banks to publish the
pay of their eight highest paid senior executive officers.
4.
It also builds on a commitment by the four major UK banks to make
detailed remuneration disclosures with respect to the five highest
paid non-board executives within their organisations.
5. The
first disclosures will be due in 2012, covering the 2011
year.
6. These proposals would apply to banks with assets in
excess of £50 billion. As such, the exact number of banks covered
will be known at the end of this financial year. As things stand,
these proposals cover around 15 banks, including the largest UK
banks and the UK banking operations of large foreign banks.
Disclosures will not be required from banks from the European
Economic Area, as these banks are subject to the rules of their
home regulators.
7. The consultation closes on 14 February
2012.
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