View more on these topics

Myners wants more constraints on banks

City minister Lord Myners has suggested that bank directors should be legally obliged to consider the overall stability of the financial system when taking business decisions.

Speaking at the National Association of Pension Funds’ investment conference in Edinburgh last Thursday, Myners called on Sir David Walker, who is to review corporate governance in banking, to look into whether risk directors should have a separate reporting line to the board and whether non-executive directors should be required to have professional banking qualifications.

Myners said: “Some of the areas I hope Sir David will explore include whether we should place an additional legal obligation of bank directors and senior executives to have regard in their activities of promoting and maintaining systemic financial stability.”

He also drew attention to the amount of time that non-executive directors should be expected to devote to their roles and urged Walker to consider whether statutory reporting on remuneration should be extended to non-board positions in a bid to get greater insight into the culture and behaviour that the firm is seeking to promote.

Myners said: “Sir David will need to examine how boards should operate both in terms of their committee set-up and ensuring management is subject to effective and rigorous scrutiny. This review will raise very fundamental questions about the operation and effectiveness of the boards of our major banks.”

Myners echoed FSA chief executive Hector Sants’ comments in calling for institutional investors to take more responsibility in challenging corporate governance. He said: “Pension trustees and their ultimate investors must show they are taking governance much more seriously. We need to address familiar gaps that have been exposed.

“Shareholders are often too passive just accepting the decisions that management makes but passivity is no longer an option. Disengaged investors lead to ownerless corporations and the risk of unaccountable executives and boards running amok. This carries with it very substantial economic risks.”

Recommended

Local authority pension funds to sue RBS

Two British pension funds are to sue Royal Bank of Scotland, Sir Fred Goodwin and the entire RBS board of directors for losses incurred when RBS was bailed out, according to The Times.

Pearl considers debt restructure

Hugh Osmond’s Pearl Group is reportedly holding talks with banks in a bid to restructure £3bn of debts.

Tax allowances and exemptions

Helen O’Hagan, Technical Manager at Prudential, looks into the planning strategies that can deliver considerable tax savings for your clients. Inheritance tax (IHT) Consider Margaret, featured on our Planning Matters family hub, who is a sprightly eighty year old with four children and several grandchildren. She’s recently been widowed and IHT planning is high on […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment