Banking: UK's Brown says world needs to curtail bankers' pay
Fresh from, as he sees it, saving the world from economic collapse, UK PM Brown is now on a mission to save the financial world from large pay packets.
Speaking at a dinner in Scotland last night, Brown said:
"When it comes to the issue of bank bonuses and pay, we need solutions which are global in scope and practical in action.
And international co-operation is needed to prevent banks playing one country off against another.
Our aim should not be to prevent rewards where they are deserved, for long-term success or hard work.
Rather it must be to prevent excessive pay and bonuses which both reward and encourage short-term decisions and reckless behaviour.
- Pay structures must be fully transparent and designed to reduce the risks faced by banks.
- They must encourage long-term value creation, with pay in the form of shares or paid over a number of years, and with claw-back if decisions prove to be wrong. A bonus shouldn’t be guaranteed, it should be earned.
- They should be based on greater corporate independence and accountability.
And as we build this new global financial system, it is vital that we* remain a world-class financial centre.
It won’t happen with a laissez-faire, hands-off, do-what-you-like approach any more than it would if governments try to micromanage the financial sector.
What is needed are tough, practical and sensible rules which protect the interests of customers, share-holders and the wider economy – while allowing us to make the most of the expertise in our financial sector and the opportunities recovery will bring."
* It is not clear who "we" is, to Brown. Earlier in the speech, he had referred to Scotland and the Scots as "we." And at another point, "we" referred to the British government." At other times, he appears to mean the entire world. When he spoke of the UK's financial sector, he did not use the term "we" and so it is not clear whether he means Scotland a s financial centre or the UK as a whole. It is, however, clear he did not mean England which, on the figures he produced elsewhere in the speech, makes up some 90% of the UK's financial sector.
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