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Bank reform 'needs to be radical' Bank reform 'needs to be radical'
(about 1 hour later)
A review of how banks are governed has not been radical enough, a Treasury minister has told the BBC. A review of how banks are governed should be "more radical", Treasury minister Lord Myners has told the BBC.
Lord Myners told business editor Robert Peston he would like a government-commissioned review of banks by Sir David Walker to be "more radical". He told business editor Robert Peston the names and salaries of top earners below board level should be disclosed.
The minister added that he would like Sir David to "step one stage further outside the box". Banks should give more voting rights to loyal shareholders who stay on as engaged owners rather than sell up, Lord Myners also suggested.
Lord Myners also proposed that banks disclose names and salary details of top earners below board level. The government-commissioned review is being carried out by former regulator Sir David Walker.
The minister also spoke about his government debut in late 2008, when he was involved in the Treasury's rescue of Royal Bank of Scotland - and the row over the pension of its former chief executive, Sir Fred Goodwin. Lord Myners told the BBC that the Royal Bank of Scotland's (RBS) former chief executive Sir Fred Goodwin informed him last year that almost 200 of his bank's employees earned more than he did.
He originally left the post with a £16.6m pension pot, although he agreed in June to hand back £4.7m. Sir Fred originally left his post with a £16.6m pension pot, although he agreed in June to hand back £4.7m.
Lord Myners said of Sir Fred: "I did, when I spoke to Fred Goodwin during the months between October and February last year, urge on him that there was much he could do in the area of public service and public duty, which would help assuage people's anger at the outcome." Lord Myners also discussed in the interview his involvement in the rescue of RBS and the high-profile pension row.
He added that he envisaged Sir Fred doing something "in the charitable area", and that it was not too late for him to "do something".
Highly criticalHighly critical
He said of Sir Fred: "I did, when I spoke to Fred Goodwin during the months between October and February last year, urge on him that there was much he could do in the area of public service and public duty, which would help assuage people's anger at the outcome."
He added that he envisaged Sir Fred doing something "in the charitable area", and that it was not too late for him to "do something".
Lord Myners is a classic poacher turned gamekeeper, says our business editor, having made a fortune building up and running a fund management company, Gartmore, a big institutional investor in British companies.Lord Myners is a classic poacher turned gamekeeper, says our business editor, having made a fortune building up and running a fund management company, Gartmore, a big institutional investor in British companies.
A share certificate is a right and entitlement of ownership which carries with it certain responsibilities Lord Myners
But now as the Treasury's City minister, he is on a mission to make such shareholders take a more responsible attitude to their ownership of businesses.But now as the Treasury's City minister, he is on a mission to make such shareholders take a more responsible attitude to their ownership of businesses.
In his interview for the BBC's Leading Questions, Lord Myners was highly critical of shareholders who prefer to sell shares in companies that take a wrong turn, rather than staying on as owners and pressurising boards to fix what's wrong.In his interview for the BBC's Leading Questions, Lord Myners was highly critical of shareholders who prefer to sell shares in companies that take a wrong turn, rather than staying on as owners and pressurising boards to fix what's wrong.
A share certificate is a right and entitlement of ownership which carries with it certain responsibilities Lord Myners In urging Sir David to be more radical than he has been up to now, Paul Myners wants him to force banks to disclose the names and pay packages of their top earners, irrespective of whether or not those receiving large bonuses are on the board.
Among his suggestions was that investors who are prepared to be engaged owners should have greater voting rights.
He wanted this idea taken up by Sir David, the former regulator asked by the Treasury to propose reforms to the governance of banks.
And, in urging Sir David to be more radical than he has been up to now, Paul Myners also wanted him to force banks to disclose the names and pay packages of their top earners, irrespective of whether or not those receiving large bonuses are on the board.
Our correspondent said that in calling for this action - among others - Lord Myners will be seen as humiliating those with whom he worked cheek-by-jowl for more than 30 years.Our correspondent said that in calling for this action - among others - Lord Myners will be seen as humiliating those with whom he worked cheek-by-jowl for more than 30 years.
Market confidence
Lord Myners told the BBC that shareholders who do not hold shares for the long term should have inferior rights as owners, arguing that "companies are too important" for big shareholders to trade in and out of them "willy nilly".Lord Myners told the BBC that shareholders who do not hold shares for the long term should have inferior rights as owners, arguing that "companies are too important" for big shareholders to trade in and out of them "willy nilly".
"We've lost sight of the fact that a share certificate - in fact we don't have them now, it's all recorded electronically - but a share certificate is a right and entitlement of ownership which carries with it certain responsibilities," Lord Myners added."We've lost sight of the fact that a share certificate - in fact we don't have them now, it's all recorded electronically - but a share certificate is a right and entitlement of ownership which carries with it certain responsibilities," Lord Myners added.
"It's not a piece of paper to be traded, to be bought and sold.""It's not a piece of paper to be traded, to be bought and sold."
Peter Montagnon, of the Association of British Insurers, said Lord Myners was "absolutely right" to raise a "real point" about the danger of "ownerless companies being unaccountable".Peter Montagnon, of the Association of British Insurers, said Lord Myners was "absolutely right" to raise a "real point" about the danger of "ownerless companies being unaccountable".
He said more needed to be done to "build up the critical mass of good, long-term owners" who were becoming a "diminishing band". Reaching out to sovereign wealth funds, which own around 10% of UK companies, might be one way of doing this, he said.He said more needed to be done to "build up the critical mass of good, long-term owners" who were becoming a "diminishing band". Reaching out to sovereign wealth funds, which own around 10% of UK companies, might be one way of doing this, he said.
But he said owners had to be able to retain the right to sell and differential voting rights was not the answer.But he said owners had to be able to retain the right to sell and differential voting rights was not the answer.
"If you discriminate between types of shareholder, that's not good for confidence in market.""If you discriminate between types of shareholder, that's not good for confidence in market."
Leading Questions is broadcast at 2230 BST on the BBC News channel.Leading Questions is broadcast at 2230 BST on the BBC News channel.