Brown says tarnished banks should pay compensation

British Prime Minister Gordon Brown continued his war of words against banks saying that the Labour will act strongly against banking excesses, and shareholders would be given new powers to have a say on the pay of bank executives.

''If what happened at Goldman Sachs and in any other bank is proven to be wrong, then hundreds of millions of dollars in compensation should be paid to British banks, and because we are the biggest shareholder in many of them, to the British taxpayer,'' Brown said at a campaign speech yesterday.

Brown last week asked the country's financial watchdog FSA to probe into the UK operations of New York-based investment bank Goldman Sachs after the US regulator sued it for mortgage securities fraud (See: Gordon Brown wants UK regulator to probe Goldman Sachs).

Goldman was sued by the US Securities and Exchange Commission (SEC) on 17 April for defrauding investors to the tune of $1 billion in subprime-related financial products (See: Goldman Sachs sued by US regulator for securities fraud).

However, the banking major says the lawsuit is politically motivated and completely unfounded.

According to the SEC complaint, Royal Bank of Scotland (RBS) paid Goldman $840 million in August 2008 to unwind a position built up by ABN AMRO, some of whose operations RBS had acquired.