Bank review recommends greater pay disclosure

By Huw Jones and Raji Menon

LONDON (Reuters) - Banks must disclose how much they pay top employees, a government sponsored report recommended on Thursday in a bid to quell public anger over "bonuses as usual" in a sector shored up by taxpayer bailouts.

The report published on Thursday from David Walker, former chairman of Morgan Stanley bank's international unit, lays down 39 steps to improve how banks are run.

Although touted as the toughest set of pay rules in the world, they stop short of actual caps or naming individuals, representing some respite for banks who on Wednesday were also cheered by a UK court victory over fees.

Board members should spend more time on the job and pay be closely monitored. Shareholders also have a duty to scrutinise how their companies are run, the report says.

Britain had to shore up its financial sector hit by the credit crunch. It nationalised or took major stakes in several banks such as Northern Rock, Lloyds (LLOY.L) and RBS (RBS.L).

Walker published his recommendations in draft form in July but has toughened up sections on pay as policymakers warn banks there can be no return to "business as usual" of unjustifiably large bonuses.

He also wants the recommendations to be implemented in law, rather than on a "comply or explain" basis outlined in July.

"There will still be public anger over bank pay and bonuses and that's understandable," Walker told Reuters on Wednesday.