Page last updated at 10:23 GMT, Friday, 27 March 2009

Banks must build trust - Darling

Alistair Darling
Mr Darling is keen to limit the public backlash towards bankers in the UK

UK Chancellor Alistair Darling has told bankers they need to restore public confidence to avoid a backlash.

In a speech, he said banks need to show they have learned from their mistakes to "rebuild public trust".

Bankers in the UK and US have come under fire recently for their levels of compensation after several banks were bailed out by the taxpayer.

Former Royal Bank of Scotland chief Sir Fred Goodwin's home in Edinburgh was attacked by vandals earlier this week.

'Society needs banks'

"It is clear - beyond doubt - that just as society needs the banks, banks need society too," Mr Darling said in a speech at the Financial Services Authority.


"Banks need to demonstrate to the public that they've learned lessons from recent events," he said. "But in order to rebuild public trust, we also need to reform banks' culture."

The attack on Sir Fred's home is thought to be due to the anger generated by the pension payout worth about £700,000 a year to the 50-year-old former chief executive.

RBS reported that it made a loss of £24.1bn in 2008 - the largest annual loss in UK corporate history - and is now majority-owned by the UK government.

Sir Fred had rejected government pressure to accept a reduction in his package when he stepped down last October.

US approach

Mr Darling also explicitly invoked President Barack Obama's line on the issue, where there has been widespread public and political anger over the issue of banker compensation.

"And President Obama was right when he says that 'we can't afford to demonise every investor or entrepreneur that seeks to make a profit'," Mr Darling said.

Tarnished US insurer AIG paid out $165m in bonuses this month, after the US government spent a total of $170bn on rescuing it since September.

The bonus debate prompted much outrage, leading to the approval of a bill by the US House of Representatives to impose a 90% tax on bonuses awarded by companies bailed out by the US government.

But Mr Obama, who expressed his outrage at the payments, said such a measure would be unconstitutional.

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Guardian Unlimited John McFall calls on politicians to do more - 8 hrs ago
Daily Express Sir Fred faces net death threats - 9 hrs ago
Time Hang the Bankers! Getting Ready to Vent in London - 10 hrs ago
Financial Times Leaders urged to prevent bank witch-hunt - 35 hrs ago
Reuters Bankers told keep low profile as public anger rises - 39 hrs ago

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