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Lloyds Bank, United Kingdom - Source: Reuters
Britain plans to force banks to reveal how many of their staff get high pay packages, in steps that go further than previous proposals, financial services minister Paul Myners said.
The proposals - which would come into force in early 2011 - include making banks reveal how many staff earned aggregate salaries of at least 500,000 pounds ($746,000) in the previous financial year.
Banks will then have to lay out how many executives fall into pay bands of 500,000 pounds up to salaries of five million and then in wider bands from there on.
The government's Walker review on bankers' pay had exempted wages below one million from disclosure and would have asked for less detail thereafter. But policymakers are mindful, with an election expected on May 6, of sustained public anger over the causes of the global economic crisis.
"This will include proposals for narrower disclosure bands than Walker proposed, starting with salary packages below the 1 million pound ($1.49 million) floor that he suggested," Myners said in a speech in London.
"We will consult on the idea, but as the Chancellor (finance minister Alistair Darling) has said - most people are convinced that far more disclosure is important, because they will then be able to see precise remuneration practices."
The aggregate totals will include salary, cash bonuses, deferred shares, long-term awards and pensions.
The British Bankers' Association said opting for bands is better than actually "naming and shaming" individuals.
"But there is still a risk of demonising people at the top end who are particularly internationally mobile. If they feel the UK establishment is getting at them, they won't come here or will go elsewhere," a BBA spokeswoman said.
The Labour government, which had to use billions of pounds of taxpayers' money to rescue several large banks during the credit crisis, argues that financial firms encouraged staff to take excessive risks by offering huge rewards.
Signs of a return to this kind of pay behaviour has sparked an angry response from a public which has endured soaring unemployment, a dearth of credit and low salary increases during an 18-month recession which Britain is now emerging from.
Some recent opinion polls have suggested that Labour, in power since 1997, could remain the largest party in parliament after the election, but fall short of an overall majority.
Such an outcome appeared highly unlikely only a few months ago when the opposition Conservatives enjoyed a commanding lead in polls. Analysts say some form of hung parliament, where no one party has control, appears most likely at present.
How best to clean up the banking system has become one of the critical policy battlegrounds ahead of the election.
"From the outset of the crisis, the government has been focused on eliminating rewards for failure and ensuring that remuneration does not incentivise risk taking," Myners said.
