Banks Told to Comply on Bonuses or Lose UK Banking Licences in Shock FSA Ultimatum
THE TELEGRAPH: Investment banks have been told that every bonus issued must comply with the regulatory guidelines – or they face having their licences to operate in Britain revoked.

In an extraordinary ultimatum that has shocked some of the City's biggest companies, the Financial Services Authority (FSA) told bank bosses that 60pc of all pay must be deferred, with no exceptions, even for those whose contracts conflicting [sic] with the edict.

Many of the global players have in recent weeks made representations to the City watchdog, in particular about pre-existing employment contracts that guarantee bonuses over a year or more. But their appeals have been met with the FSA's toughest yet response.

One pay executive in a major bank told The Daily Telegraph: "The message came back that while the FSA agreed that it does not have jurisdiction over contractual law, it does have jurisdiction over issuing bank licences in London, and that we should go away and unwind the contracts."

Bankers at Merrill Lynch are among the first affected. Those with pre-existing contracts were told about the FSA's tough stance on Friday when their bonuses were agreed.

One Merrill Lynch employee said: "We thought that contracts would be immune from changes but were told by bosses that their hands were tied and there was nothing they could do, the regulator had put its foot down."

Banks that have not yet told staff about the bonus payouts are now scrambling to ensure that they are comply with the FSA rules.

Senior directors are concerned that the stance could result in the banks facing a series of legal challenges from individuals with pre-existing contracts. Headhunters say that banks including Barclays Capital and Nomura have lured star performers by offering them large guaranteed bonuses.

One headhunter said: "Many of these contracts have guarantees that 50pc of the bonus will be paid in cash. These are tricky things to unpick. But cleverly, the FSA has put the onus on the banks to unwind the contracts, rather than itself getting embroiled in a complex legal row." >>> Louise Armitstead and Helia Ebrahimi | Wednesday, February 03, 2010

Obama Issues Warning to Bankers
BBC: US President Barack Obama has warned bankers against complacency, saying that some in the industry are ignoring the lessons of the financial crisis.

"We will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis," he said.

He called on Wall Street to support "the most ambitious overhaul of the financial system since the Great Depression".

The financial system was returning to normal but had not recovered, he added.

"There are some in the financial industry who are misreading this moment," said President Obama in a speech to mark one year since the collapse of Lehman Brothers bank.

"Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's."

He told Wall Street that it could not resume taking risks without regard for consequences and said they should not expect US taxpayers to bail them out again.

The speech came as UK Prime Minister Gordon Brown said that he was "appalled" that some financial firms had been continuing or even extending their bonus culture.

In a BBC interview, 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. New powers >>> | Monday, September 14, 2009

Barack Obama: "We intend to pass regulatory reform through Congress" >>> | Monday, September 14, 2009