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| Version 1 | Version 2 |
|---|---|
| Banks 'must restore public trust' | Banks 'must restore public trust' |
| (about 2 hours later) | |
| Banks must focus on restoring the public's trust in their role, despite signs of economic improvement, the boss of the UK financial watchdog has said. | Banks must focus on restoring the public's trust in their role, despite signs of economic improvement, the boss of the UK financial watchdog has said. |
| Financial Services Authority (FSA) chairman Lord Turner said the industry should consider carefully any business that fell outside its core roles. | Financial Services Authority (FSA) chairman Lord Turner said the industry should consider carefully any business that fell outside its core roles. |
| Bosses should walk away from activities that had no "social benefit", he added. | Bosses should walk away from activities that had no "social benefit", he added. |
| Risky investments and exotic products were largely blamed for banks needing billons of pounds worth of bail-outs. | Risky investments and exotic products were largely blamed for banks needing billons of pounds worth of bail-outs. |
| Critics argue the bonus culture rewarded excessive risk-taking for short-term profits, and helped spark the crisis | |
| But rebuilding trust would not mean an end to well-paid traders "much as some might like it", Lord Turner said. | |
| Challenges | Challenges |
| "Bank investments might become more boring, but after the last year, there's a lot to be said for boring," Lord Turner said in a speech to the annual Lord Mayor's City Banquet. | "Bank investments might become more boring, but after the last year, there's a lot to be said for boring," Lord Turner said in a speech to the annual Lord Mayor's City Banquet. |
| He added banks needed to concentrate on core functions, including providing savings and credit and payment products to individuals, companies or institutions. | He added banks needed to concentrate on core functions, including providing savings and credit and payment products to individuals, companies or institutions. |
| And he said one of the biggest challenges for bankers was to regain public trust and to rebuild an understanding that banks and financial markets provided "not only socially useful, but vital functions". | And he said one of the biggest challenges for bankers was to regain public trust and to rebuild an understanding that banks and financial markets provided "not only socially useful, but vital functions". |
| Lord Turner said the City of London still had plenty to offer and that many parts of the financial system "aren't bust and don't need fixing". | Lord Turner said the City of London still had plenty to offer and that many parts of the financial system "aren't bust and don't need fixing". |
| However he added: "It is possible to say that, but also recognise that not all financial innovation is valuable, not all trading activity plays a useful role and that a bigger financial system is not necessarily a better one." | However he added: "It is possible to say that, but also recognise that not all financial innovation is valuable, not all trading activity plays a useful role and that a bigger financial system is not necessarily a better one." |
| Profit priorities | Profit priorities |
| Much of the ire about the crisis in the banking sector has been focused on the pay and bonuses received by some bankers. | Much of the ire about the crisis in the banking sector has been focused on the pay and bonuses received by some bankers. |
| Lord Turner said it was possible to "overstate the importance" of the role banker bonuses had played in the crisis. | Lord Turner said it was possible to "overstate the importance" of the role banker bonuses had played in the crisis. |
| But he acknowledged it was an area for legitimate public concern. | But he acknowledged it was an area for legitimate public concern. |
| The FSA's main response to the crisis has been demanding that banks build up greater buffers of reserves and liquidity so they can cope with any future difficulties. | The FSA's main response to the crisis has been demanding that banks build up greater buffers of reserves and liquidity so they can cope with any future difficulties. |
| And Lord Turner said the banks' focus should be building up reserves, ahead of paying out hefty remuneration. | And Lord Turner said the banks' focus should be building up reserves, ahead of paying out hefty remuneration. |
| He said that at the G20 meeting in Pittsburgh, leaders would seek to get global agreement on the priority for how bank profits were spent. | He said that at the G20 meeting in Pittsburgh, leaders would seek to get global agreement on the priority for how bank profits were spent. |
| It would be easier for banks to moderate bonus payouts if they knew that competitors were doing the same, he added. | It would be easier for banks to moderate bonus payouts if they knew that competitors were doing the same, he added. |
| "An industry that recognises the need to moderate excesses, rebuild trust and embrace reforms to prevent another crisis will prosper, Turner said. | |
| "The real enemies of the City's success and of the market economy, with all its great potential to spread prosperity and opportunity, are not those who raise these issues, but those who want to ignore them." | |
| French President Nicolas Sarkozy has led the charge to install mandatory caps on bonuses which the Uk and US have opposed. |