RTTNews - Tuesday, British Prime Minister Gordon Brown told Financial Times newspaper that banks should claw down rewards for bankers if their performance turns poor in subsequent years.
In an interview with the Financial Times, Brown said bonuses should be paid on the basis of long-term success instead of short-term speculative gains. Further, regulators should be able to impose higher capital requirements on financial institutions.
He added that international coordination is required in this matter. The UK could not be expected to enforce regulation unilaterally.
However, he do not support a mandatory cap on bonuses as proposed by France. Brown added that it would be difficult to enforce such mandatory cap.
Recently, French President Nicolas Sarkozy said he would be impose tough rules on bonuses paid by banks, which would link such financial rewards to performance. As such, new rules will defer bonuses over a period of three years and one third of the award will be in shares.
Sarkozy said he would press for tough regulations on bonus payments in the next G20 meeting to be held at Pittsburgh in September. Other leaders will also call for measures to curb excessive bonus payment.
Brown told FT, the banking sector had overheated and now it is important to protect the status of the City of London as an international financial centre.
On August 27, Chairman of the Financial Services Authority, Adair Turner said in a roundtable discussion in Prospect magazine that he supports special taxes on British banks so as to reduce excessive bonus payments.
But he told Sky News on Sunday that asking the FSA to deal with regulations on high bonuses would be economic illiteracy. It is up to the government to take action if it want to control bonus payment.
For comments and feedback: contact firstname.lastname@example.org