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Mon, Aug 03, 2009 - Page 10 News List

UK minister criticizes bank review

DIG DEEPER: British Financial Services Secretary Paul Myners said a review of the nation’s banks should consider questions such as shareholder responsibility


A government-commissioned review of the British banking industry should be more radical regarding issues such as shareholder rights and transparency, a UK minister said on Saturday.

British Financial Services Secretary Paul Myners said the review of the nation’s banks being conducted by former regulator David Walker should consider questions such as rewarding long-term investors with better voting rights and forcing banks’ top earners to disclose their salaries.

“I would like to see David Walker step one step further outside the box of thinking he is currently in and see what are the more radical, indeed the most radical, solutions,” Myners told the BBC’s Leading Questions program.

An interim version of Walker’s report, which is due in November, has already recommended strengthening oversight by boosting the role of non-executives in the risk and payment process.

Myners said the final report could include recommendations such as barring investors who hold shares for less than six months from voting at annual general meetings. The idea would be to encourage shareholders to think of themselves as stakeholders as opposed to traders who jump in and out of companies “willy-nilly.”

“We’ve lost sight of the fact that a share certificate ... is a right and entitlement of ownership which carries with it certain responsibilities,” he said. “There is a weakness in an absence of proper engagement and stewardship by the shareholder, as far as the company is concerned.”

Myners also said he was interested in a US-style disclosure system in which banks have to publish the pay packages of their five highest-earning employees, though he said this could be extended to cover 10 or 20 people in British institutions.

The finance industry reacted coolly to Myners’ suggestions.

Peter Montagnon, the director of investment affairs at the Association of British Insurers, said he recognized the problem of shareholder responsibility, but that creating different classes of shareholders might have implications.

“If you discriminate between the kinds of shareholders you have got, that is not good for confidence in the market,” he told BBC radio’s Today program.

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