Five big banks in the UK have agreed to adopt reforms to the way they structure compensation, in line with measures agreed by the Group of 20.

According to a statement from the UK’s Chancellor of the Exchequer, Alistair Darling, the five banks — Barclays, HSBC, Lloyds, RBS, and Standard Chartered — have confirmed that they will comply with a new rule on remuneration, which comes into force on January 1, 2010. They are committed to implementing enhancements in disclosure, bonus deferral, and clawback provisions.

In a joint statement, the five banks said, “In a competitive and international business it is right to make sure that our staff are appropriately and competitively rewarded for sustainable, long-term performance. We therefore welcome the G20 remuneration reforms, and their global nature, as it is essential that banking reward is consistent with effective risk management and that there is parity both nationally and internationally on these issues. We will work with the FSA in adopting these remuneration reforms, recognising that all G20 nations have also committed to their implementation to ensure a level playing field.”

The government said that it will soon hold discussions with other banks, both UK and international banks, in order to gain similar commitments. And the Financial Services Authority will work with other countries’ banking regulators to ensure a consistent global application of these reforms, it said.

“It is vital that our financial services industry remains at the forefront of the industry globally and takes a responsible and long-term approach to remuneration. I am therefore pleased that the main banks incorporated in the UK have agreed to lead the way in implementing the agreement reached on bank remuneration at the G20, and expect them to set the standard for all other UK and international financial institutions to follow,” said Darling.

IE