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September 29, 2009

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UK to clamp down on bankers' bonuses

BRITISH Treasury chief Alistair Darling said yesterday that automatic annual bonuses for banking executives would be outlawed in an bid to curb excessive risk-taking in the country's huge financial sector.

Darling told the governing Labour Party's annual conference that new legislation to scrap the payments would be put before Parliament within weeks.

Leaders of the G20 rich and developing countries agreed last week to limit executive bonuses. Darling said bankers in Britain will in future be offered bonuses for their performance over several years, rather than 12 months.

"We won't allow greed and recklessness to ever again endanger the whole global economy and the lives of millions of people," Darling said.

He told the rally that new laws would include a clawback provision and help to "end the reckless culture that puts short-term profits over long-term success.

"It will mean an immediate end to automatic bank bonuses year after year; it will mean an end to immediate payouts for top management."

The plans, to be in a new Business and Financial Services Bill, will be proposed formally in the Queen's Speech in December, the annual announcement of the government's legislative program.

Darling told the rally that Britain's economy had not yet recovered from the financial crisis. "Germany, France and Japan are showing signs of growth. There are many independent forecasters now believing too that the UK is coming out of recession," he said. "I think it is too early to say so with total confidence."

The Labour Party is trailing badly in the opinion polls but Prime Minister Gordon Brown said his party could recover if the economy rallies and the public give him credit for averting a worse financial crisis.


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