The Walker Review is recommending that banks should be forced to make public the number of their employees paid over £1 million per year, although no individuals will be named.
The review, commissioned by the Government to improve the corporate governance of financial institutions, also wants non-executive directors of banks to be empowered to exert greater influence on risk and remuneration policies.
In presenting the review, Sir David Walker said: “Of course major regulatory issues need to be addressed to assure the soundness of the financial system but there will be significant downside if the regulatory pendulum swings too far.”
He added: “Improved governance can play an important complementary role by instilling greater confidence in the way banks are being run by their boards and overseen by their owners. This should help regulators to strike the right balance.”
The Government intends to include the proposed measures in its Financial Services Bill, which will also give the Financial Services Authority (FSA) the power to act where it deems remuneration in the banking sector to be excessive.
In any event, the FSA will assume new powers aimed at ensuring bonuses for senior bank staff are linked to long term profitability, from next year.
As of 1st January 2010, the regulator will be able to limit bonus agreements to one year; in certain circumstances insist they are clawed back and demand that a proportion of senior executives’ bonuses are paid in shares.
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