US banks face pay disclosure in the UK
Wall Street banks could be forced to disclose compensation details for their highest paid London-based staff, according to new Treasury proposals.
By Harry Wilson, Banking correspondent
9:23PM GMT 06 Dec 2011
A raft of millionaire bankers working for the UK businesses of groups including Goldman Sachs, JP Morgan and Morgan Stanley could be affected by the plans.
Under the proposals, the 15 biggest UK-based banks – excluding those from elsewhere in the European Union – would have to publish pay details for their top eight executives below board level.
Unveiling the proposals, Mark Hoban, Financial Secretary to the Treasury, said banks should not reward their staff for short-term performance while leaving shareholders with “long-term risk”.
“We want shareholders to hold banks to account for their bonus structure, which is why we’re taking action to make top-level pay more transparent. We want the most transparency for those with the greatest responsibility,” said Mr Hoban.
The move is likely to lead to a storm of protest from large international banks with major operations in the UK, defined as those with assets in excess of £50bn.
Major US investment banks each employ several thousand staff in Britain, as do other banks that will be affected such as Swiss lenders Credit Suisse and UBS.
British banks such as Barclays, HSBC and Royal Bank of Scotland are already required to publish the pay details of their five highest paid staff below board level.
A consultation on the rules will continue until February 14 and if enacted banks would have to disclose pay for the current year.
The moves comes as the authorities step up their criticism of City pay, with the Bank of England warning that banks must use profits to shore up their finances rather than paying large bonuses.
“We need stronger banks, not larger bonuses this winter. I would expect the banking system to follow that advice,” said George Osborne, the Chancellor.