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| UK banks accept curbs on bonuses | UK banks accept curbs on bonuses |
| (19 minutes later) | |
| Britain's five largest banks are to accept the curbs on bonuses agreed by G20 leaders at the recent Pittsburgh summit, Alistair Darling has announced. | Britain's five largest banks are to accept the curbs on bonuses agreed by G20 leaders at the recent Pittsburgh summit, Alistair Darling has announced. |
| The five banks that have signed up to the new rules are Barclays, HSBC, Lloyds, RBS and Standard Chartered. | The five banks that have signed up to the new rules are Barclays, HSBC, Lloyds, RBS and Standard Chartered. |
| While the curbs do not limit bonuses, the changes will include the banks having to disclose all such payments. | While the curbs do not limit bonuses, the changes will include the banks having to disclose all such payments. |
| The chancellor said UK banks were leading the way, and he expected them to set the global standard for others. | The chancellor said UK banks were leading the way, and he expected them to set the global standard for others. |
| "It is vital that our financial services industry remains at the forefront of the industry globally and takes a responsible and long-term approach to remuneration," he said. | |
| Risk management | |
| Banks have been under pressure to limit large bonuses since the credit crisis. | Banks have been under pressure to limit large bonuses since the credit crisis. |
| ANALYSIS BBC Business Editor Robert Peston | |
| The bankers have agreed to end the scandal of bonuses being paid for short-term profits that turned out to be an illusion. This is significant, but let's not get carried away. | |
| The Financial Services Authority demanded this of them some months ago, and it is actually what the banks are already doing. | |
| So this was a pretty easy commitment for them to make, and it certainly doesn't mean it is going to be a bleak Christmas for bankers. | |
| It has been a good year for many of them and they will still get these bonuses - some of them will be very big - but they won't be able to get their hands on the cash for at least two or three years. | |
| Excessive bonuses were considered to be a significant cause of the big losses in the banking sector, because they encouraged investment bankers to take excessive risks. | Excessive bonuses were considered to be a significant cause of the big losses in the banking sector, because they encouraged investment bankers to take excessive risks. |
| The five banks said in a joint statement that "it is essential that banking reward is consistent with effective risk management and that there is parity both nationally and internationally on these issues". | The five banks said in a joint statement that "it is essential that banking reward is consistent with effective risk management and that there is parity both nationally and internationally on these issues". |
| They will now comply with the new rules on remuneration that city regulator the Financial Services Authority (FSA) first announced in August and will be put into force on 1 January, in line with the G20 agreement. | |
| The five banks that have agreed to limit their staff bonuses include three that have not needed access to emergency government funds - Barclays, HSBC and Standard Chartered. | The five banks that have agreed to limit their staff bonuses include three that have not needed access to emergency government funds - Barclays, HSBC and Standard Chartered. |
| Key elements of the FSA's new rules include: | |
| • Minimum bonus agreements should be limited to just one year | |
| • Bonuses should be clawed back in the result of a person's poor performance | |
| • Firms will be required to publish an annual report on their bonus payments | |
| • Large banks should have an independent committee to determine bonus payments | |
| • Banks must ensure that their total remuneration payments to staff does not affect the underlying financial health of the business | |
| • Bonus payments must take into account current and future risks to the business | |
| • Failure to hold sufficient cash reserves could result in the FSA forcing the bank in question to increase its capital base. |