G20 Banking Deal May Not Stabilize Fincl Sector - UK Bk Survey

LONDON (Dow Jones)--U.K.-based bankers are divided over how much impact any agreement on the banking sector at the meeting of the Group of 20 leading industrialized and developing economies will have on the financial sector, but they also made it clear they wouldn't welcome a cap on bonuses, a survey showed Monday.

According to the survey of financial professionals conducted by eFinancialcarreers.com, a slim 53% majority of those surveyed said the banking sector would become more stable as a result of the Pittsburgh meeting agreement, with the remaining 47% saying it wouldn't make a significant change to the sector.

When asked about which element of bonus regulation they would prefer not to be implemented as a result of the G20 summit, bonuses being capped as a percentage of salaries was clearly viewed as the worst possible outcome.

Of the 465 financial professionals surveyed, 44% said they expected remuneration packages would fall as a result of the meeting, 35% said they would stay the same, and 21% said overall compensation packages would rise in the future.

However, despite more bankers expecting a drop in wage packages, 88% of those surveyed said they were confident about their own deals, as they expected any changes to be implemented in 2010, rather than in the remaining months of this year.

"Financial professionals in London at present are split as to whether the proposed changes can make the banking system any more stable in the future," said John Benson, founder and chief executive of eFinancialcareers.com. "Likewise, few see any immediate impact on their own compensation levels in the coming months."

The global economic recession prompted the U.K. government to provide two bailout packages for the country's biggest banks deemed too big to fail, taking large stakes in several banks as a result.

The government has also implemented clauses in its rescue packages aimed at ensuring banks lend more money to U.K. businesses and consumers. In addition, the financial services watchdog, the Financial Services Authority, has changed the rules of remuneration in a bid to discourage risk taking.

Asked in the eFinancialcareers.com survey about likely future reforms, 35% of participants identified restrictions on bonus guarantees, 33% said there would be increased capital requirements and 26% suggested bonus clawbacks.

-By Ilona Billington, Dow Jones Newswires; 44 207 842 9452; ilona.billington@dowjones.com

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(END) Dow Jones Newswires

September 27, 2009 19:01 ET (23:01 GMT)


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