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Foreign banks join campaign to show restraint

Foreign banks operating in the city of London have today agreed to join the FSA's campaign to show restraint in banking remuneration and bonus packages. This comes on top of the recent agreement with the top five banks in the UK to take into account risks when looking at remuneration packages and bonus issues. But will this really work in practice?

In theory this is seen as a major breakthrough for the FSA (Financial Services Authority) but in reality it may be nothing more than window dressing. When the UK economy recovers and the world economy continues to boom we will see banks revert to normal and banking remuneration and bonuses start to grow again. While the idea is good it will be almost impossible to police in practice because of various ways in which rewards can be paid in the sector.

There is no doubt that the UK banking sector is under severe pressure at the moment and while many of the overseas operators may be financially stronger, it is the sector as a whole which could hold the economy back in the short to medium term. Perhaps we need to start concentrating more upon increasing business levels rather than restraining remuneration and bonus packages?

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