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14 October 2009

City of London banks agree to support G20 bonus reforms

The UK subsidiaries and branches of leading overseas banks have agreed to support the implementation of reforms to bank pay agreed by the G20 in Pittsburgh, the Financial Services Secretary, Lord Myners, announced today.

Bank of America Merrill Lynch, Citigroup, Credit Suisse, Goldman Sachs International, JP Morgan Securities Ltd, Morgan Stanley, Nomura and UBS have confirmed their commitment to the FSA Rule and supporting Code on remuneration practices, which was published in August and comes into force on 1 January 2010, and their full support for the G20 agreement, which sets global standards for the implementation of the Financial Stability Board’s remuneration principles.

EU banks with major London branches, BNP Paribas, Deutsche Bank and Société Générale confirmed that they will implement the G20 agreement in accordance with their home regulator and would seek to voluntarily comply with the FSA Rule on Remuneration for their UK based employees.

In a joint statement, the banks said:

"In a competitive and global business, banking remuneration must be consistent with effective risk management and there must be national and international consistency on this issue.  We welcome the global nature of the G20 remuneration reforms and will work with the FSA and regulators in our home countries in adopting the reforms, recognising that all G20 nations have also committed to their implementation to ensure a level playing field.”

The Financial Services Secretary said:

"The financial services industry must take a responsible and long-term approach to remuneration if it is to retain its competitiveness and regain public trust.  I am pleased that the most significant banking institutions operating in the UK have moved quickly and are supporting our implementation of the agreement reached on bank remuneration at the G20, and this reinforces the standard we have set for other financial institutions and countries to follow. I will be writing to the chairs of their parent companies’ Remuneration Committees to share with them the outcome of this meeting."

Notes for editors

1. The G20 reforms are available on the Pittsburgh Summit website.

2. The FSA Remuneration Code comes into force on 1 January 2010. This would include payments made for performance year 2009.

3. UK regulated banks will continue to work with the FSA in implementing the G20 principles.  The FSA Rule on remuneration is already broadly in line with the G20 Implementation Standards and will be updated in 2010 to reflect the remaining differences, developments within the EU, and experience in implementing this Rule. The FSA will apply the same standards to all entities covered by the Rule on remuneration in the UK (and as it does already, including foreign owned subsidiaries), and will work with overseas banking regulators to ensure a consistent and timely global application of these reforms.

4. Key elements of the G20 reforms include:

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