LONDON, Feb 8 (Reuters) - Former financial regulator and banker David Walker will chair an independent review into British bank governance announced earlier on Sunday by finance minister Alistair Darling, a Treasury official said.
Darling promised the review into banks' management and remuneration amid public outrage at reports that Royal Bank of Scotland was considering paying almost 1 billion pounds ($1.47 billion) in bonuses to its staff despite being bailed out by taxpayers late last year.
The review will focus on the failure of banks' boards to manage risk and remuneration effectively and the failure of banks' main shareholders to keep adequate checks on boards' activities, the official said.
Specifically, the terms of reference would be:
- the effectiveness of risk management at board level, including the incentives in remuneration policy to manage risk effectively;
- the balance of skills, experience and independence required on the boards of UK banking institutions;
- the effectiveness of board practices and the performance of audit, risk, remuneration and nomination committees;
- the role of institutional shareholders in engaging effectively with companies and monitoring of boards;
- whether the UK approach is consistent with international practice and how national and international best practice can be promulgated.
Walker headed the Securities and Investment Board, a predecessor to Britain's current financial regulator the Financial Services Authority (FSA), from 1988-92, and subsequently chaired Morgan Stanley's international division from 1994-2000 and 2004-05.
He has also worked at the Treasury, the International Monetary Fund and the Bank of England.
Walker will report to Darling, business minister Peter Mandelson and junior finance minister Stephen Timms, and his conclusions will be ready around the time of Darling's budget, expected some time in March or April, the official said.
(Reporting by David Milliken and Sumeet Desai, editing by Kate Kelland)
((david.milliken@reuters.com; +44 20 7542 5109)
($1=.6819 Pound) Keywords: BRITAIN BANKS/REVIEW
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Darling promised the review into banks' management and remuneration amid public outrage at reports that Royal Bank of Scotland was considering paying almost 1 billion pounds ($1.47 billion) in bonuses to its staff despite being bailed out by taxpayers late last year.
The review will focus on the failure of banks' boards to manage risk and remuneration effectively and the failure of banks' main shareholders to keep adequate checks on boards' activities, the official said.
Specifically, the terms of reference would be:
- the effectiveness of risk management at board level, including the incentives in remuneration policy to manage risk effectively;
- the balance of skills, experience and independence required on the boards of UK banking institutions;
- the effectiveness of board practices and the performance of audit, risk, remuneration and nomination committees;
- the role of institutional shareholders in engaging effectively with companies and monitoring of boards;
- whether the UK approach is consistent with international practice and how national and international best practice can be promulgated.
Walker headed the Securities and Investment Board, a predecessor to Britain's current financial regulator the Financial Services Authority (FSA), from 1988-92, and subsequently chaired Morgan Stanley's international division from 1994-2000 and 2004-05.
He has also worked at the Treasury, the International Monetary Fund and the Bank of England.
Walker will report to Darling, business minister Peter Mandelson and junior finance minister Stephen Timms, and his conclusions will be ready around the time of Darling's budget, expected some time in March or April, the official said.
(Reporting by David Milliken and Sumeet Desai, editing by Kate Kelland)
((david.milliken@reuters.com; +44 20 7542 5109)
($1=.6819 Pound) Keywords: BRITAIN BANKS/REVIEW
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.