King calls for strict stance on regulation

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ref="http://www.cityam.com/company/bank-of-england">BANK of England governor Mervyn King said yesterday that tougher measures on banking regulation were still needed, and added that some bonuses being paid to executives were &ldquo;absolutely astronomic&rdquo; and could not be justified.<br /><br />&ldquo;Executives at the top are earning vast sums, beyond the dreams of ordinary people, for doing a job which it&rsquo;s very hard to say justifies that kind of bonus,&rdquo; King said.<br /><br />He added that companies should not get sucked into an attitude of &ldquo;the other banks are doing it, we must take part too&rdquo;.<br /><br />The news came as the insurance body ABI slammed treasury minister Lord Myners&rsquo; radical shake-up plans for financial regulation.<br /><br />His plans for a two-tier shareholder register with separate rights for long and short-term investors are &ldquo;dangerous,&rdquo; the group said, and may lead to a loss of confidence in the markets. <br /><br />The ABI said the plans could leave companies with one group of supportive shareholders, and one group losing out as it is unable to trade freely. <br /><br />&ldquo;If you discriminate between the kinds of shareholders you have got, that is not good for confidence in the market,&rdquo; warned Peter Montagnon, director of investment affairs at the ABI. <br /><br />&ldquo;We need to do more to build up a critical mass of good long-term shareholders who are going to work together to solve this problem,&rdquo; he added.<br /><br />Myners&rsquo; suggestion to overhaul regulation is based on the idea that institutional shareholders take more responsibility for the ownership of their stakes.<br />&nbsp;<br />He has said that companies without responsible shareholders are &ldquo;ownerless corporations,&rdquo; and says they are at the heart of the financial downturn.