Government welcomes publication of Walker review

The Government strongly welcomes Sir David Walker’s proposals for the reform of the corporate governance of UK banks and other financial institutions.

Lord Myners, the Financial Services Secretary to the Treasury said:

“Corporate governance failures were a major contributor to the financial crisis. The responsibility for the actions that led the global financial sector to the brink of collapse ultimately rests with the people who sat around the bank board tables and those who approved their appointment.

“The weaknesses in board practice, risk management, control of remuneration and exercise of ownership rights identified by the Review must be addressed.

“Board members in future must ask tougher questions of their chief executives. They need to spend far more time fulfilling their responsibilities. Shareholders must ensure that directors have the skills necessary for the tasks required.

“Sir David has put forward detailed and comprehensive proposals, setting a new benchmark for best practice both nationally and internationally.

“The consultation process now needs to look not just at the proposals, but also how to implement and, if necessary, take them further, including their applicability to non-financial sector firms.

“International adoption of similar measures would also reinforce corporate governance and contribute significantly to financial stability. Therefore, the Government will take steps to ensure that proposals to improve corporate governance are considered internationally.”

(HMT) Government to strengthen resolution arrangements for investment banks

Financial Services Secretary Paul Myners today published a report setting out the Government's initial thinking on reforms to strengthen the UK's ability to deal with the failure of an investment bank.

Like other financial centres, London was affected by the collapse of Lehman Brothers in September 2008 and the events that followed. The Government is committed to implementing reforms that will enable an easier resolution of a failing investment bank should any such event happen again.

The report outlines the Government's thinking on the changes to market practice, regulation, and insolvency law that might be needed to deal with any future failue of a major investment bank.

The report considers the treatment of investment banking clients after default, the future of their assets, and the treatment of their open or unreconciled trading positions. It also examines what can be done to make the process of insolvency more effective, and to limit the damage that may be done by a failing investment bank.

These reforms are part of a package of steps aimed at renewing the financial services sector, other aspects of which will be laid out in the Government's forthcoming paper on financial regulation.

The reforms which are considered in this report demonstrate the Government's commitment both to financial stability, and to the future of London as a global investment banking hub.

Commenting on the report, Paul Myners said:
"The UK's insolvency regime is an important aspect of its attractiveness as an international centre for investment banking. The Government is committed to maintaining these advantages and strengthening the existing solvency regime."