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14 December 2009

Myners speech: 'What’s next for UK banking?' – It is vital to end the risk-taking and excessive rewards culture that is damaging the system

'It is right that public opinion has undertaken a vigorous public debate on the causes of the crisis. A prosperous, sound, responsible banking system is an international asset that the Government wants to promote and it needs to succeed', Myners said.

He justified tax payers’ anger at seeing their money spent rescuing institutions that got rich by taking reckless gambles, drawing on an implicit and uncharged public guarantee.

As regards bankers, he said that the vast majority were not to blame for the recklessness of a few of their peers. In fact, they have been saddened to see the reputation of their profession seemingly tarnished beyond repair. All the damage should be turned in to something constructive.
He then set out the actions needed to repair the damage:
·         The UK Government and the industry must work to rebuild a safe, sound and responsible sector that will drive economic growth and jobs free from taxpayer support.
·         The Government has a very busy regulatory reform agenda to implement not only domestically through the Financial Services Bill, but also in Europe and with its G20 partners.
·         Banks themselves are rebuilding their capital bases and restructuring their businesses.  The need to improve the quantity and quality of bank capital to protect depositors, the system and taxpayers is an absolute priority.
·         Businesses and workers have a pressing interest in seeing new drivers of growth get the finance they need.
·         Shareholders - the ultimate owners of banks - have (thanks to Walker) a manifesto for engagement and stewardship. Our banks should not be ‘ownerless corporations’.
As regard bonuses, he said that “it is worth reminding everyone that complaints from well-paid City workers about the Government’s bonus tax are really directed at employers, not the Treasury.  It is a matter for bank boards and shareholders, not the Government, to decide if bonus payments will be cut – the economics of the decision may have changed, but the choice still remains.”

© HM Treasury

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