The five banks, including those which did not have recourse to government recapitalisation – Barclays, HSBC, Lloyds, RBS, and Standard Chartered – have confirmed their commitment to comply with the FSA Rule on remuneration, which comes into force on 1 January 2010 and which is in line with the G20 agreement, setting global standards for the implementation of the FSB’s remuneration principles. They are committed to implementing important enhancements in disclosure, deferral, and clawback with effect from 1 January 2010 for performance year 2009.
In a joint statement, the five banks said: "In a competitive and international business it is right to make sure that our staff are appropriately and competitively rewarded for sustainable, long-term performance. We therefore welcome the G20 remuneration reforms, and their global nature, as it is essential that banking reward is consistent with effective risk management and that there is parity both nationally and internationally on these issues. We will work with the FSA in adopting these remuneration reforms, recognising that all G20 nations have also committed to their implementation to ensure a level playing field.”
The Chancellor said: "It is vital that our financial services industry remains at the forefront of the industry globally and takes a responsible and long-term approach to remuneration. I am therefore pleased that the main banks incorporated in the UK have agreed to lead the way in implementing the agreement reached on bank remuneration at the G20, and expect them to set the standard for all other UK and international financial institutions to follow."
The banks will continue to work with the FSA and adopt the G20 principles. The FSA Rule on remuneration is already broadly in line with the G20 Implementation Standards and will be updated in 2010 to reflect the remaining differences, developments within the EU, and experience in implementing this Rule. The FSA will apply the same standards to all entities covered by the Rule on remuneration in the UK (and as it does already, including foreign owned subsidiaries), and will work with overseas banking regulators to ensure a consistent and timely global application of these reforms.
The Government will shortly hold discussions with other UK and international banks in order to gain similar commitments.