Bankers who misbehave in the UK may have to hand back bonuses up to seven years after being awarded them, if a new set of proposals from regulators comes into force. But at what stage does the cost of doing business in the UK become too high for the banking sector? Joel Flynn reports.
The recession might be slowly turning into a memory in the heart of Britain's finance industry, but banker bashing by consumers remains firmly on the agenda. Proposals by regulators and the Bank of England are looking to make them take more responsibility for their actions. New rules could mean repaying bonuses seven years later. Senior managers are also being threatened with jail for reckless behaviour. Tom Vosa is from NAB. SOUNDBITE: NAB Market Analyst, Tom Vosa, saying (English): "So any board of directors at a bank, whether they be executive or non-executive, now have a much larger amount of pressure placed on them. The argument is they will be very certain to make sure that things drill down into the bottom of the bank." SOUNDBITE: Reuters reporter, Joel Flynn, saying: "The proposed new oversight is in large part a response to ongoing public anger at bankers. Places like here in Canary Wharf have, for some, become a symbol for the excesses and irresponsibility of the lending that caused the global financial crisis in 2007." On top of the bailouts of banks like RBS and Lloyds during the financial crisis, recent scandals have kept bankers in the headlines. Lloyds was fined $370 million this week for rigging market benchmarks, while Barclays and others have faced fines for attempting to manipulate gold and other asset prices. Dominic Elliott is from Reuters Breakingviews. SOUNDBITE: Breakingviews commentator, Dominic Elliott, saying (English): "Trying to change ethics and culture is a generation's work and you've got all these things that keep coming out like this oath for bankers that was produced by a think tank yesterday and everyone wants to improve the ethics in the industry but it's very hard and it takes a long time." The proposed changes represent some of the world's toughest curbs on the banking sector. But some say the new rules could increase uncertainty for bankers. In the past, even the banking regulators themselves have had reservations over caps on banker bonuses as proposed by the European Commission. SOUNDBITE: NAB Market Analyst, Tom Vosa, saying (English): "They made it clear that does increase the fixed costs of banking and that therefore this actually leads to a less profitable and less agile business model." That could make attracting top talent to the capital even harder, just as the industry and the economy looks to be getting back on its feet.