The U.K. is weighing plans to make overseas banks including Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM) disclose the earnings of their top executives, extending an accord already reached with British banks.
Firms with more than 50 billion pounds ($77 billion) of assets would have to disclose the compensation of their eight highest-paid non-board level executives, even if their headquarters are overseas, the Treasury said in a consultation paper today. The plan would affect the 15 largest banks operating in the U.K., the government said. Domestic lenders including Royal Bank of Scotland Group Plc (RBS) and Barclays Plc (BARC) already publish it under a February agreement with the Treasury.
Chancellor of the Exchequer George Osborne is trying to prevent a public backlash over top pay as living standards are eroded by inflation and an anemic recovery. The government is stepping up pressure on financial firms to limit compensation as they start awarding bonuses in coming months. The Bank of England this week also urged banks to limit bonuses and dividends if their earnings weren’t enough to bolster capital.
“The point of disclosure here is to ridicule and reveal what is considered excessive,” said Jason Kennedy, 41, chief executive officer of Kennedy Group in London and a recruiter for the past 16 years.
London’s bankers may receive 4.2 billion pounds ($6.5 billion) in bonuses for 2011, the lowest in almost a decade as financial-services firms’ earnings dwindle, the Centre for Economics & Business Research Ltd. said in October. The U.K. Treasury is also set to collect about 2.5 billion pounds from this year’s payouts, less the amount in 2007, the CEBR said.
Goldman Sachs International, the European unit of Goldman Sachs, paid its employees an average of $742,000 each in 2010, 12 percent more than in 2009, even as profit declined. The London-based division paid 5,956 workers and contractors $4.42 billion in 2010, according to filings posted in April. The figures exclude unvested stock awards and the U.K.’s bonus tax, announced in 2009. Officials at Goldman Sachs and JPMorgan in London declined to comment on the government proposals.
Osborne today urged banks to build up their financial defenses rather than pay big bonuses this year as the Treasury said it will explore ways to tackle “unacceptable” levels of pay. Along with increased disclosure, the U.K. also proposed giving shareholders a greater say over executive compensation.
“Today’s consultation forms part of the government’s ongoing commitment to introducing the most comprehensive disclosure regime of any major financial center, and follows a number of significant steps that have already been taken to reduce excessive risk-taking and improve corporate governance,” the Treasury said in a statement.
The consultation period ends on Feb. 19.
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