UNDER STRICT EMBARGO
UNTIL 00:01 UNTIL THURSDAY 26 NOVEMBER: Government to implement
Walker reforms on pay and governance
The Government
will move quickly to implement the reforms of bank pay and
governance proposed today by Sir David Walker.
Sir David’s review was commissioned by the Government earlier
this year to explore failures of corporate governance and
management of banks. His final report suggests a series of reforms
to strengthen the role of shareholders, improve the quality of
bank boards, and to increase transparency of pay and bonus policies.
Chancellor of the Exchequer Alistair Darling said:"One
of the fundamental causes of the financial crisis was bad
management of some our major banks. Too many people around board
tables did not ask the right questions; some chief executives did
not fully understand the risks being taken by their traders; pay
and bonuses encouraged reckless risk taking instead of responsible
behaviour. Banks failed because some of the top people running
banks failed to do their jobs."Tougher regulation,
including stronger capital and liquidity requirements, reform of
the mortgage market, greater competition, consumer protection, and
living wills will help to make our system safer for the future.
But the culture of the banks themselves must change."Sir
David’s proposals are the blueprint for how banks must be run in
the future. His interim report 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."
Sir David’s report recommends action to be taken by the
Government, the Financial Services Authority, the Financial
Reporting Council, bank owners, and the banks themselves. For its
part, the Government accepts all the recommendations and will
begin immediate work to implement them.
Specifically, the Government’s Financial Services Bill will allow
the Treasury to issue regulations forcing banks to disclose in
bands the number of staff earning more than £1million per annum.
We will issue draft regulations for consultation in the New Year
and bring them into force as soon as practicable after enactment
of the Bill. This will force disclosure for the 2010 performance year.
In addition, the Financial Services Secretary Paul Myners will
shortly meet with major institutional investors to discuss steps
they can take to implement Walker’s recommendations as owners of
UK banks.
Contacts:
HM Treasury Press Office
Phone: 020 7270 5238
NDS.HMT@coi.gsi.gov.uk