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The future of banking

How will the government’s proposals affect bankers?

The global economic crisis has had a profound effect on the operation of the financial and banking industry in the UK over recent years.

Now that the UK is taking its first steps towards recovery, what will the future of the banking sector look like? Will it return to a stable, respected career – one of choice for ambitious graduates – or will it be seen as a risky career choice, laden with pitfalls and redundancies?

The banking sector featured highly on the coalition government’s list of priorities in May 2010. Their proposals, once implemented, should result in a more robust and risk-averse banking system, with the aim of stopping any future such collapses. Here are some headlines of the proposals:

  • The Bank of England will be given greater power. It will assume responsibility for the control of macro-prudential regulation and oversee micro-prudential regulation.
  • An independent commission will be established to investigate the separation of retail and investment banking. They will have 12 months to submit their recommendations.
  • Potential net lending targets for nationalised banks and a national loan guarantee scheme may be established to increase the flow of credit to SMEs, encouraging business growth.
  • An agency will be created to tackle serious economic crime, taking over from the work currently done by the Serious Fraud Office, FSA and OFT.
  • A free national financial advice service for the public will be launched. It will be funded by the proposed social responsibility levy that is to be placed on the financial services sector.
  • Plans will be brought forward to reform bonus procedures, reducing bonus payments and addressing ‘unacceptable bonuses’.

With the public backlash towards bonus payments this is not surprising, but as an integral part of the banking culture this could have a profound effect on banks and bankers. Any proposals must consider the banks’ need to offer competitive reward structures to attract and retain the best talent on the market.

With such long and stressful working hours, the financial rewards must be sufficient to keep existing bankers in the industry and tempt new blood in to replace them, while still staying within the realms of a ‘reasonable’ level. This will likely prove to be a delicate balance.

If you’d like to benchmark your recruitment packages, or to discuss any aspect of banking staffing and recruitment, contact your local Hays banking expert.