New regulator could withhold bank bonuses

FSA chief executive Hector Sants says the PRA can withhold bank bonuses and dividends if they undermine risk management and capital adequacy.

FSA chief executive Hector Sants says the Prudential Regulation Authority will have powers to withhold bank bonuses and dividends if it believes they will undermine the institutions’ capital adequacy and risk management.

Sants also says the new prudential regulator should be allowed to make public its investigations into banking failures.

Sants. who will become head of the PRA when the FSA is split into two next year, said the new authority would need investigative powers to avoid a repeat of the recent failure to make public the FSA’s report into RBS.

Sants said: ‘When a bank failure does occur, based on some trigger, maybe the commitment of public money, it would be appropriate that the PRA does deliver a report…We want to move away from the difficult situation in which the FSA found itself with RBS.’

‘We are extremely keen to get real clarity from stakeholders about what the PRA should and should not be doing,’ he added.

He also wants to require banks to make public detailed information on their holdings – data that is currently only seen by the regulator.

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