“If there were any doubts about the need for radical reform, the UBS rogue trader has dispelled them, because we simply cannot have rogue institutions exposing taxpayers to the risk of exploding financial weapons of mass destruction,” Mr Cable told the Liberal Democrat conference yesterday.
The loss at UBS, first estimated at $2bn, and the charging of a 31-year-old trader with fraud and false accounting were announced on September 15, three days after Mr Vickers published the final report of his Independent Commission on Banking.
While he stopped short of calling for a separation of retail and investment banking, the business secretary backed his plan. Chancellor of the exchequer George Osborne said it will be made law by 2015.
Mr Cable also said he was looking at ways of giving shareholders more control over pay, citing banks as institutions where there were “rewards for failure”.
“People accept capitalism, but they want responsible capitalism,” Cable said. “It is hard to explain why shareholders can vote to cut top pay but the managers can ignore the vote.”
Options under consideration in a discussion paper published by Mr Cable’s Department for Business, Innovation and Skills yesterday include giving shareholders a binding vote on pay and putting employees on company remuneration committees.
Mr Cable told delegates he would have liked to do more to control the level of bank pay and bonuses and blamed his Conservative coalition partners for blocking that.
Cable was scornful of the suggestion from some lawmakers in Prime Minister David Cameron’s Conservative Party that the top 50% rate of income tax, on earnings of more than £150,000 (€173,929) a year, should be lowered.
With the British economy stalling, Cable also called for the country’s banks to increase their lending to business.