CREDIT CRUNCH
Treasury probe into bank bonuses
The Chancellor of the Exchequer Alistair Darling has ordered an investigation into bankers’ pay as part of a general review examining the corporate governance of UK banks.
The ex-City regulator Sir David Walker is chairing the review. Sir David is a former executive director of the Bank of England, and former chairman of the Securities and Investments Board. He is now a senior advisor at Morgan Stanley International.
His preliminary conclusions are not due until the autumn and final recommendations by the end of the year.
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The probe will examine board management of risk, incentives to manage risk in bank remuneration policies, the competences needed on bank boards, board practices and structures, and the role played by institutional shareholders.
Mr Darling told BBC One's Andrew Marr Show (Sunday, 8 February 2009): “We've got to make sure success is rewarded not failure.” He added: “They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect."
Read the BBC report online at http://news.bbc.co.uk/1/hi/business/7877161.stm.
Terms of reference of banking review
To examine corporate governance in the UK banking industry and make recommendations, including in the following areas:
the effectiveness of risk management at board level, including the incentives in remuneration policy to manage risk effectively
the balance of skills, experience and independence required on the boards of UK banking institutions
the effectiveness of board practices and the performance of audit, risk, remuneration and nomination committees
the role of institutional shareholders in engaging effectively with companies and monitoring of boards
whether the UK approach is consistent with international practice and how national and international best practice can be promulgated.
Want to know more?
Read the full HM Treasury press release online at www.hm-treasury.gov.uk/press_10_09.htm.