FINANCIAL SERVICES
Cable warns banks over bonuses
The Business secretary Vince Cable has warned banks that they should be “very, very self-conscious” about how they reward staff at a time when the government was concerned that a lack of finance for small businesses could stall Britain's fragile economic recovery.
Cable was speaking at the launch of a consultation paper which aims to encourage an industry-led recovery by addressing the problems businesses face accessing finance. "I am making it clear", Cable said, "that the banks should be very, very self-conscious about bonuses and dividend payments. I also want to make them aware that the government is not devoid of sanctions it could bring to bear" (quote from Guardian newspaper).
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Key quotes from consultation document
“The Bank of England’s recent Financial Stability Report (FSR)5 notes that there is scope for banks to build capital while sustaining lending to the real economy. The FSR estimates that if UK banks limited bonus and dividend payouts to pre-crisis and 2009 levels respectively, the major banks could generate around £10 billion of additional capital over 2010, which could in turn sustain £50 billion new lending.” - Financing a Private Sector Recovery, Cm 7923.
“UK banks have already taken steps to enhance their resilience and prepare for the stronger regulatory requirements that will apply in future by raising capital and retaining earnings. Banks earning large profits should, where appropriate, continue to treat the conservation and enhancement of capital as a higher priority than bonus or dividend payments.” - Financing a Private Sector Recovery, Cm 7923.
Want to know more?
Title: Financing a Private Sector Recovery, Cm 7923, Department for Business, Innovation and Skills, July 2010.
Availability: You can download the 46-page consultation document in PDF format at the Department for Business, Innovation and Skills web site at www.bis.gov.uk/businessfinance.
The closing date for consultation is 20 September 2010.
--> “Government warns banks over bonuses and dividend payouts”, by Larry Elliott and Jill Treanor, guardian.co.uk, 26 July 2010. Read the article online at www.guardian.co.uk/business/2010/jul/26/govermemt-warns-banks-over-lending.
Consultation on the implementation of reforms to financial regulation
Financial secretary to the Treasury, Mark Hoban MP, today launched the Government’s consultation on the implementation of reforms to financial regulation. The consultation seeks views on the detailed composition of the new financial regulatory architecture, including the scope, objectives, powers, and governance arrangements for the new regulatory bodies - the financial policy committee, the prudential regulation authority, and the consumer protection and markets authority - and issues concerning the relationship between them.
The government intends to introduce legislation to create the new regulatory authorities in the current Parliamentary session, and expects passage of primary legislation to be completed in the next two years.
Title: A New Approach to Financial Regulation: Judgement, focus and stability, HM Treasury, Cm 7874, July 2010.
Availability: You can download the 76-page consultation document in PDF format at the HM Treasury web site at www.hm-treasury.gov.uk/consult_financial_regulation.htm.