March 6 (Bloomberg) -- Gordon Brown called on Group of 20 nations to agree a code on pay for bankers that would prevent institutions from rewarding bonuses that encourage risky behavior.

The U.K. prime minister, who returned yesterday from meeting President Barack Obama in Washington, told Labour Party members in Scotland that he wanted governments to agree together how they would regulate compensation systems.

“We cannot allow a race to the bottom in standards when we need to see the best standards all round,” Brown said in a speech to the Scottish Labour conference in Dundee. “We must agree international principles to end that short-term bonus culture and instead reward long-term sustainable results.”

The comments are aimed at getting G-20 support for action to reshape the banking industry after market turmoil forced governments around the world to provide more than $495 billion in support for institutions. Brown hosts a summit of G-20 leaders in London on April 2.

Brown is counting on the G-20 summit to revive his political fortunes after the Conservative opposition cut deeper into his popularity. With the next general election due by June 2010 at the latest, voter support for Labour has declined as Brown ordered additional measures to rescue banks.

‘Disaster’ for Markets

“If we get anodyne committee conclusions with all the substance taken out of them the markets on April 3 will be something of a disaster zone,” Mark Malloch-Brown, a minister in the Foreign Office, told reporters in London today.

Brown’s remarks also amplify criticism of bankers from Labour government ministers, who have put the blame for the credit crisis on executives who pursued quick gains without thinking about the consequences for the rest of the economy.

The Conservative opposition said Brown was “grandstanding on the international stage” and that the British government isn’t serious about the issue.

“The truth is that Barack Obama has taken action to limit bonus payments, while Gordon Brown, once again, is just talking about it,” said Philip Hammond, a Conservative lawmaker who speaks on finance. “His call for a global crackdown on bonuses rings hollow when he’s allowed the banks he directly controls to pay out millions of pounds in bonuses.”

Brown’s Anger

Brown said today he was “angry that hard-working people are being squeezed because of banking mistakes” and called for an “urgent clean up and clear out” of the banking system.

Treasury officials are consulting lawyers about how to claw back some of the 703,000-pound ($989,000) annual pension awarded to Fred Goodwin, the former chief executive of Royal Bank of Scotland Group Plc who led the bank to the biggest loss in U.K. company history and a 28 billion-pound government bailout.

The government owns more than 70 percent of RBS and stakes in Lloyds Banking Group Plc. It nationalized Bradford & Bingley Plc and Northern Rock Plc last year.

Business Secretary Peter Mandelson this week called for a “more sober” banking system and tighter regulation. He also talked about pay restraint for bankers.

“The habits of excessive, unmerited rewards for some at the top do not sit well with the very tough realities we are now working in,” Mandelson told an audience of bank executives in London on March 4. “People will inevitably ask why the ‘bonus culture’ in some parts of the financial services sector appears to have led to behavior that destroyed value.”

Brown has already said he wants Britain’s Financial Services Authority to take pay structures into account, setting higher capital ratios for institutions that give bonuses for quick profits rather than performance over several years.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

Last Updated: March 6, 2009 12:24 EST