Some Banks To Avoid Bonus System Reforms
6:39pm UK, Sunday November 15, 2009
Mark Langford, Sky News Online
Some banks are to be excluded from Government plans to reform the bonus system, Sky News has learnt.
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Under the proposals, the Financial Services Authority will have the power to cancel bonus payments it believes are not in the interests of the banking system.
But Sky’s City Editor Mark Kleinman said this will not apply to banks which are not regulated by the watchdog.
“It will apply broadly to all banks regulated by the FSA,” he said.
“It doesn’t include all banks which have large operations in the City of London such as BNP Paribas of France and Deutsche Bank, which is one of the biggest employers in the City.
“They will not be subject to this new crackdown because they are not regulated by the FSA in the same way that Barclays, HSBC and some of the other international banks such as Goldman Sachs are regulated.”
Kleinman added: “There is likely to be some concern the rules won’t apply across the board.”
Goldman Sachs: ‘Not included’
Gordon Brown had promised a “transformation” of the way the financial sector is policed as the centrepiece of Wednesday’s Queen’s Speech.
In a podcast on the Downing Street website the Prime Minister said: “We will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer.
“This means a transformation of the way the financial sector is policed, with banks themselves and not the taxpayer made to pay for bank failings.”
Mr Darling: ‘More stability needed’
Chancellor Alistair Darling said bankers must start seeing themselves as “fellow citizens” and said some of the bonuses they had received were viewed by the public as “ludicrous”.
Mr Darling told the Sunday Telegraph his bill would give the FSA “powers if necessary to tear up contracts that would result in payments being made that would cause instability”.
The new rules will come into effect next year if the Bill completes its passage through Parliament before the election – which must be held by June 3.