Government promises quick action on banking review recommendations

The British government will implement the recommendations of the banking review speedily, a minister said.

Story highlights

  • The banking review report was cautiously welcomed by the City of London.
  • Minister: Very senior people at the top of banks should be held to account
  • The government had introduced a new criminal offense for benchmark manipulation

The British government will implement the recommendations of a review into the failings of the British banking system speedily, including considering whether bankers should be threatened with prison, a minister said on Wednesday.

Greg Clark, financial secretary to the Treasury, promised to implement the report's proposals "at a pace" and to respond in full within a month.

Read more: British banks need $38 billion to fill cash gap

He said it seemed a "perfectly reasonable observation" that very senior people at the top of banks should be held to account for the risks they take but stopped short of committing to a new criminal offence of reckless misconduct in charge of a bank.

"We think it's a good report, it makes all the right recommendations in terms of the changes to the culture of banking," he told BBC news.

Banking boss: Pay cap 'will hurt banks'
Banking boss: Pay cap 'will hurt banks'

    JUST WATCHED

    Cracking down on risky banking

MUST WATCH

Cracking down on risky banking 05:32
PLAY VIDEO
Banking boss: Pay cap 'will hurt banks'
Banking boss: Pay cap 'will hurt banks'

    JUST WATCHED

    Banking boss: Pay cap 'will hurt banks'

MUST WATCH

Banking boss: Pay cap 'will hurt banks' 03:11
PLAY VIDEO
Official: Tough road for EU bank union
Official: Tough road for EU bank union

    JUST WATCHED

    Official: Tough road for EU bank union

MUST WATCH

Official: Tough road for EU bank union 03:39
PLAY VIDEO

He added that the government had introduced a new criminal offence for benchmark manipulation which was punishable by imprisonment.

Read more: U.K. banks' next $1 billion payout

"They've asked us to consider whether it's possible to implement this further offence for very senior people. We'll do that, we'll respond to parliament and then if necessary we'll legislate," he said.

But Lord Myners, former Labour city minister, warned that "very little" would change for "several years" after the report. He said George Osborne, chancellor, would respond with "fine words" in his Mansion House speech on Wednesday night but there would be many further reviews, for example, on competition, pricing, and account portability.

The review -- which also rebuked the government for interfering in state-backed banks -- was cautiously welcomed by the City of London.

Boris Johnson, mayor of London, welcomed the report's focus on good governance and said wrongdoing should be "rooted out and punished". But he also said the City needed to remain competitive and that the UK should help bring other global financial centres towards better, but not heavy-handed, regulation.

Mark Boleat, policy chairman at the City of London Corporation, the Square Mile's local authority, said the report contained some "sensible suggestions" on incentives, accountability and increased competition that would foster long-term thinking and improve risk management.

Read more: Europe financial sector is fragile, says IMF

He added: "It is important, however, to note that much work has already been done in this area and the impact of past reforms should be properly assessed before more changes are introduced. What the banking sector needs is clarity and certainty from policy makers over the future shape it will be required to take in coming years."

Anthony Browne, chief executive of the British Bankers' Association, called it the "most significant report into banking for a generation". He said banks looked forward to working with the government to reform the sector.

Andrew Tyrie, chairman of the parliamentary committee that wrote Wednesday's report, defended the decision to include the threat of prison for bankers in cases of "very serious misconduct".

He insisted it would only be used if the government was forced to bail out a bank.

Mr Tyrie said a new criminal offence of reckless misconduct in charge of a bank was needed because bankers could harm the whole economy.

"Bankers are different. Bankers and banks are in a position where they cannot just do harm to their shareholders but do harm to the whole economy and end up putting taxpayers on the hook," Mr Tyrie told the BBC's Today programme.

"Remember this can only be triggered -- the reckless misconduct investigation -- when there has been taxpayer support for a bank."

He said the financial crisis was like Murder on the Orient Express where "everyone had some small contribution on the deaths and nobody was responsible".

Mr Tyrie said it was "absolute nonsense" that bankers could be driven out of the UK by the report's suggestions. He added he was not criticising paying the successful well but was proposing measures such as long deferral of bonuses to ensure the money was truly deserved.

        CNN Business

      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Why are Iraq oil markets stable?

        Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
      • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

        Ebola's economic 'scare factor'

        The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
      • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

        Casinos beat the banker

        Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
      • spc marketplace middle east ata atmar a_00010015.jpg

        Bateel's new bakery venture

        Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
      • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

        Is this the real new black?

        A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
      • Move over Siri, here comes Jibo

        Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
      • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

        Jordan: Seeking calm in chaos

        Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
      • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

        Forget 3D, it's 4K now

        At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Where is Iraq's oil?

        Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
      • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

        Why Europe needs Russian gas

        The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.