Page last updated at 16:12 GMT, Monday, 14 September 2009 17:12 UK

Brown 'appalled' by bank bonuses


The PM said ''action will have to be taken by the world community''

Prime Minister Gordon Brown says he is "appalled" that some financial firms are continuing - or even extending - their bonus culture.

In a BBC interview to mark a year since the collapse of Lehman Brothers, he said global action was needed to sort out "unfinished business" at banks.

Cleaning up the sector, including global regulation was needed, he added.

President Barack Obama has also warned Wall Street bankers that they cannot go back to their old ways.


Mr Brown said he was determined that world leaders meeting in Pittsburgh next week would "complete the unfinished business" of cleaning up banks - including establishing rules on bonuses.

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Leaders were examining how limits could be imposed on bonuses as a percentage of profits or in revenues.

But in an interview with BBC business editor Robert Peston, he reiterated that global action was essential so that one country was not "isolated" by its stance on remuneration.

"I'm appalled that some institutions are already wanting to return to the old ways; that some of our financial institutions are taking action which, in my view, is not only wrong but counterproductive in continuing, indeed extending the bonus culture of the past," Mr Brown said.

"Some of our financial institutions are taking action which, in my view, is not only wrong but counterproductive in continuing, indeed extending the bonus culture of the past.

"Now I will want an agreement - because we're talking about banks in other countries as well as banks in Europe - at the G20."

Light touch

The collapse of US investment bank Lehman Brothers, soon after troubled rival Bear Stearns was sold with Federal Reserve intervention, marked the start of a near-total collapse of the financial system that required unprecedented global intervention to keep it solvent.

Mr Brown argued that the UK was the first to recognise the need for stronger regulation of the financial services sector in the aftermath of the Lehman's collapse.

Robert Peston
The PM will wait for Germany, France and the US to cut their deficits before taking further steps to reduce the British national debt
Robert Peston
BBC business editor

But this followed years of him pushing for light-touch regulation and non-intervention while as chancellor and later prime minister.

"It's true the mood of opinion in Britain was that we needed less [regulation] and not more. Now we've found we need more," he said.

"We should all have been supervising more. The general public have got to feel that when they go to a bank that bank can be trusted. They've got to know that when they put money in that financial institution, that the money is safe and secure. And they've got to know that the bankers or financiers they are dealing with are taking risk, but not reckless risk.

"That's what we're putting into the rules and regulations that will govern the banking system for the future."

Mr Brown's comments came as a BBC World Service poll showed that 67% of people in 20 countries wanted more regulation and running of national economies.

Overall, the survey suggested that people in developed countries were less satisfied than those in developing countries.

Responsible banking

Mr Brown refused to blame Britons for the level of rising personal debt during his time as chancellor and prime minister, saying the vast majority of debt had been the result of the "legitimate aim" of people trying to buy a home.

However banks needed to "be more responsible about how they approach people" when it comes to offering credit," he added.

Stabilising the banking sector had seen an increase in personal savings, he said, adding: "Consumers themselves will want to be more prudent in the way they deal with their own finances."

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