IMF: Reveal bankers’ pay packets
A global financial watchdog is calling for New Zealand’s banks to be forced to cough up more information on how much top staff are paid.
In a report released yesterday, the International Monetary Fund (IMF) made a raft of recommendations on how the Reserve Bank regulates the commercial banks.
Recommendations range from urging a rethink of how New Zealand would manage the collapse of a major bank, to improving relations with its trans-tasman counterpart and giving the Reserve Bank greater power over the directors which run the local institutions.
The IMF also recommends the Reserve Bank falls into line with the Basel principles for banking supervision on corporate governance. This would likely require banks to provide greater detail on how much staff are paid, especially at the highest level.
Developed by the Swiss-based Bank for International Settlements, something of a global central bank, the Basel principles attempt to address deficiencies in banking supervision exposed by the global financial crisis.
The policies state that banks should have policies and processes covering a wide range of corporate governance elements, including compensation, ‘‘commensurate with the risk profile and systemic importance of the bank’’.
According to the IMF, the Reserve Bank had elected not to implement some aspects of the Basel principles, including that of pay, because it did not ‘‘consider them material for New Zealand banks or particularly meritorious’’.
While the salaries of the chief executives of New Zealand’s largest banks are known, this is only because the figures are disclosed in the annual reports of the banks’ Australian owners.
Typically the New Zealand chief executives of ANZ, Westpac, BNZ and ASB are believed to be among the highest-paid executives in the country, sometimes earning more than $4 million a year.
Meanwhile Kiwibank, which is owned by NZ Post, ACC and the NZ Super Fund, gives no details about executive salaries, providing only the total amount of fees paid to its board of directors.
The IMF report said the scope of the Reserve Bank’s monitoring of bank corporate governance did not give enough detail to meet the standards of the Basel principles.
Tali Williams, a national organiser in the finance sector for First Union, said the special role played by banks created a need for transparency.
‘‘Banks, while being private companies, do perform a public function, providing credit to a market economy,’’ Williams said. ’’There is a strong case, or a right even, for the public to know how banks operate and how senior executives are paid.’’
Williams said that the degree to which bankers were paid bonuses was relevant to the level of risk banks were taking. The union would not support disclosure of pay down to the lowest level of bank employees.
In a statement the Reserve Bank confirmed there was no requirement for banks to disclose senior pay.
‘‘We consider that the most important factors for disclosure allow assessment of the financial institution as a whole, rather than any specific individuals,’’ a spokesman said.
‘‘The Reserve Bank acknowledges that our approach is not always aligned with the approach preferred by the Basel Committee on Banking Supervision.’’