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Banks Agree to New Pay Laws

Fri, 16 Oct 2009

The Treasury has revealed that leading overseas banks operating in London have agreed to new rules on bankers' bonuses and pay. A number of major foreign banks will implement new rules on remuneration after the Financial Services Authority (FSA) published a new code on pay in August. The changes will take effect from January and calls for national and international consistency on pay. Significantly, the new rules contain no limit on the bonuses which bankers may receive, though the FSA rules declare that bonuses shouldn't be guaranteed for more than one year and senior employees should have their bonuses spread across a three year period.

Among the banks to sign up are Bank of America, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, JP Morgan, Merrill Lynch, Morgan Stanley, Nomura, Societe Generale and UBS. Goldman Sachs have also signed up, and they this week revealed a bonus pot of £12.5 billion - the largest in the company's history.

Banks have faced criticism in recent months for allowing bankers to pick up huge bonuses within two years of the subprime crisis. With interest rates on savings accounts still miserly, banks can expect further criticism amidst hefty bankers bonuses.
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