Bank review wants 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.

The government and the Conservatives -- who are tipped to win the election next year -- backed the measures.

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 court victory over fees.

Nevertheless bankers would have to wait much longer -- up to five years -- to receive some of their remuneration, a tougher condition than agreed globally by the G20 group of countries.

The Institute of Directors said disclosure of millionaire pay packets was justified and gave investors useful information.

Corporate governance services firm PIRC said the review was "tinkering in the face of overwhelming fiduciary failure" and that a sigh of relief will be almost audible among banks.

The Financial Services Authority watchdog said banks will abide by its new remuneration code from January based on the G20 guidelines but the code will be reviewed next year.