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UK Banks pledged to reform bonuses

Barclays, HSBC, Lloyds bank, Royal Bank of Scotland and Standard Chartered have today entered into an agreement with the UK government which will see them abide by the new Financial Services Authority rules on remuneration and bonuses. This would appear to be a direct consequence of the recent G20 meeting at which banks remuneration and banking bonuses were heavily discussed. So will this agreement stick?

Even though the likes of Abbey, owned by Santander, were not actually at the meeting with Alistair Darling it is thought that they are all so open-minded to signing up to the new agreement. The new arrangement will see UK Banks introduced clawback facilities and deferred bonuses for certain members of staff and a greater disclosure of remuneration packages throughout the industry. However, as the UK regulations are much more stringent compared to the US system there is a feeling that many US banks will be able to circumnavigate UK regulations using their own banking laws.

After today's disastrous news that the Sun newspaper has deserted the Labour Party, the government will be happy to see headlines tomorrow confirming that it has been successful in reining in UK bankers and reducing remuneration packages. Whether the end result will be as good as the package being put forward by the government remains to be seen.

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