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Britain says will seek to jail reckless bankers

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(Globalpost/GlobalPost)

Britain's government on Monday pledged to jail bankers found guilty of reckless misconduct, backing a recommendation contained in a report written by a panel of cross-party lawmakers.

The Parliamentary Commission on Banking Standards, established by the coalition government after the Libor rate-rigging scandal last year, published its findings in June.

Its report, entitled "Changing banking for good", had called for senior bankers accused of carrying out professional responsibilities in a reckless manner to face possible prison.

Giving its formal response, the Conservative-Liberal Democrat government led by Prime Minister David Cameron said in a statement: "The behaviour of some in the financial services industry has damaged the reputation of an industry that employs hundreds of thousands of people and is vital to our economic prosperity.

"We today set out plans to implement the major recommendations of 'Changing banking for good' including... the introduction of a criminal offence for reckless misconduct by senior bank staff."

The statement, signed by finance minister George Osborne, a Conservative, and business minister Vince Cable of the Liberal Democrats, backed also moves to claw back bonuses handed to staff at state-rescued banks and to defer future bonuses for up to 10 years.

The pair added that the coalition would seek to "enhance the soundness and stability of the banking sector" and "address the problems with standards which have done so much to undermine society's faith in the banking system".

The government additionally plans to set up a new banking standards regime governing the conduct of bank staff, and take more steps to improve competition within the British banking sector.

It will also review the case for splitting the state-rescued Royal Bank of Scotland into a so-called good bank and a bad bank, in line with the report's conclusions.

The Commission was formed last year after revelations that staff at Barclays bank tried to manipulate the Libor rate, which is used as a benchmark for global financial contracts worth about $300 trillion.

Barclays has been heavily fined over the affair, as have Royal Bank of Scotland and Swiss lender UBS.

The reputation of Britain's banking sector has been damaged in recent years by a string of scandals, including also credit insurance mis-selling and ongoing controversy over staff behaviour in the run-up to the 2008 global financial crisis.

The Commission included Archbishop of Canterbury Justin Welby, the Church of England's spiritual leader, as well as lawmakers from across Britain's main political parties.

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http://www.globalpost.com/dispatch/news/afp/130708/britain-says-will-seek-jail-reckless-bankers