The David Walker update on bankers wages (following his 2009 report) which calls for more open rules for bonuses in Britain, is welcome. However, it is unlikely to make much difference.
Recent research that we conducted found that there was an estimated £450 billion awaiting investment in the City of London alone – more than twice the upper estimates of the UK national debt. This is a result of short termism and bonuses. In order to make the big bonuses bankers must focus on short term gain, which is also demanded by shorthold shareholders.
Something needs to be done if we are not to see similar economic collapse in future. Yet the governments’ actions to the recommendations will be tempered by the fear that they will cause a migration of capital. While this is a risk, I personally believe that this will [...]

The Walker report is a lowest common denominator response to addressing corporate governance at UK banks. We need a deep overhaul of the financial system: much better regulation, longer-term thinking, and a break up of the investment banking mindsets which led to the financial crisis.
Giving non-executive directors more powers, scrutinising how they are appointed, or increasing regulation alone will make absolutely no difference.  Non-executive directors already have the powers; it’s the culture of investment banking globally which must change.
Non-executive directors must spend more time understanding the bank on whose board they sit.  They have to understand the culture, get to know the key managers in the bank, and spend more time in the bank appreciating the way business is done there.  Banks also need to spend the resources to ensure their non-executives become familiar [...]