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Monday, British Chancellor of the Exchequer Alistair Darling said the government will introduce legislation to end bankers' reckless culture that puts short-term profits over long-term success, in the next few weeks.
Speaking at the Labour Party annual conference in Brighton, he said, "Let me assure the country, and warn the banks, that there will be no return to the business as usual for them. So in the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success."
"It will mean an end to automatic bank bonuses year after year. It will mean an end to immediate payouts for top management. Any bonuses will have to be paid over years, so they can be clawed-back if not warranted by long-term performance," the Chancellor said. "We won't allow greed and recklessness to ever again endanger the whole global economy and the lives of millions of people," he added.
Regulation on bankers' pay is associated with the decisions taken in last week's G-20 meeting meeting held in Pittsburgh. At the meeting, Darling met French Finance Minister Christine Lagarde, who is also expected to announce bank regulations in her country.
The Chancellor is set to hold a secret meeting with the chairmen of the remuneration committees of UK's four big banks this week, the Sunday Times newspaper said. According to the schedule, Darling will speak to Richard Broadbent, chairman of Barclays Plc's remuneration committee, Colin Buchan of Royal Bank of Scotland Group Plc, Mark Moody-Stuart of HSBC Holdings Plc and Wolfgang Berndt of Lloyds Banking Group Plc.
Further, the newspaper said the Financial Services Secretary Paul Myners will meet representatives of foreign-owned banks in London. This will include the world's biggest investment banks.
Sunday, British Prime Minister Gordon Brown said on BBC's Andrew Marr Show that he will "ban the old bonus system" and force banks to act in a more responsible manner. He criticized banks for not understanding the damage they had done to the economy and noted that his government would be introducing tough measures to bring them into line. He added that the measures will "represent the toughest action of any country in the world."
The Chancellor also stated that the government will introduce a new Fiscal Responsibility Act to keep public borrowing under control. "We must keep the public finances on a sustainable path. The long-term health of our economy depends on it," he said. But, it should be done rationally, in a way that is right for the economy, not driven by dogma.
Moreover, Darling said he is proud of the way his government addressed the crisis in the past twelve months and the difference made in the country over the past twelve years. He criticized Tories' approach saying it as wrong, naïve, and down right dangerous. "It will damage our economy now and in the future."
As a result of the global intervention to avert the crisis, Germany, France and Japan started showing signs of growth and many independent forecasters now believe that the UK too is coming out of recession. But, Darling said, "I think it is too early to say so with total confidence." He chose to stick with his budget prediction that, as long as the government continues to support the economy, recovery will be underway in the UK by the turn of the year.
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