Top banker calls for remuneration reform

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LONDON – In an interview with the BBC conducted before this weekend’s events, Stephen Green, chairman of HSBC, stated banking executives’ pay was excessive and that the industry focused too much on short-term profits.

“There has been far too much focus on payments that are short-term focused. People pick up the tab for short-term profits, without having to bear the costs of long-term impairments,” said Green in the interview.

Much has been said in recent months about how much compensation regimes at investment banks linked to short-term success were to blame for the recent financial turmoil. Several papers, including from the Institute of International Finance and the President’s Working Group’s Financial Stability Forum, have focused on the need for reform in this area, although none has suggested the problem could be rectified by legislation. However, banks are now waking up to the fact they need to act together to ensure their remuneration regimes do not create an operational risk to their firms or contribute to a global systemic risk.

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