LONDON (AP) — Major overseas banks operating in London have agreed to implement new rules on bank bonuses approved at the Group of 20 nations meeting in Pittsburgh, Britain's Treasury office said Wednesday.
U.S. banks Merrill Lynch, Bank of America, Citigroup, Goldman Sachs, JP Morgan and Morgan Stanley are among the banks that have agreed to accept a new British code on banking remuneration that comes into force on Jan. 1.
In a joint statement, the banks stressed that there must be "national and international consistency" on rules over pay.
The agreement from foreign banks follows an announcement last month that the major British banks — HSBC, Barclays, RBS, Lloyds and Standard Chartered — would follow the new code, which pledges to link bonuses to long term performance.
Leaders at the G-20 meeting last month said a significant portion of bank officials' potential compensation should be delayed and tied to the performance of their investment decisions. They said excessive compensation contributed to excessive risk-taking and the recent global recession.
Under the new guidelines, which will be implemented in Britain through main regulator, the Financial Services Authority, bonus payments will be tied directly to performance, and will have to be repaid if performance falls. Companies will also have to publish an annual report on pay and bonuses, and give details on how bonuses and salaries are decided.
Other international banks who signed up were Credit Suisse, Nomura, UBS, BNP Paribas, Deutsche Bank and Societe Generale.
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