Published May 11, 2009

Wee Cho Yaw calls for review of bankers' compensation

By ARTHUR SIM

	Email this article
	Print article
	Feedback

(SINGAPORE) United Overseas Bank (UOB) chairman Wee Cho Yaw has called for a review of bankers' current compensation framework as it encourages greater risk-taking for short- term gains.

Mr Wee: 'The financial tsunami has wreaked havoc on the global economy, leading to a recession in almost all parts of the world. As a consequence, the banking fraternity is right at the bottom of the totem pole insofar as public respect and trust is concerned.'

He said that as financial rewards are based on short-term targets and profitability, 'there is an insatiable urge to derive greater profits every year at the expense of longer-term downside risks, such as investment products like collateralised debt obligations, credit default swaps and accumulator'.

'There is, therefore, a need to factor in attendant risks in the compensation system,' he added.

Speaking at The Asian Banker Leadership Achievement Awards Gala Dinner and Ceremony held yesterday in Beijing, where he was also conferred the QFC-Asian Banker Lifetime Achievement Award, Mr Wee took the opportunity to speak about his displeasure with the banking community.

He said: 'The financial tsunami has wreaked havoc on the global economy, leading to a recession in almost all parts of the world. As a consequence, the banking fraternity is right at the bottom of the totem pole insofar as public respect and trust is concerned.'

Having been a part of the banking industry for 51 years, Mr Wee said it was 'with great pride' that he followed his father into the profession. 'It is, therefore, very painful to me to hear and read the adverse comments levelled at bankers these days. I believe that, as members of the banking fraternity, all of us here this evening must urgently rebuild public trust and confidence.'

Offering some advice, Mr Wee noted that it has generally been acknowledged that an important strength of family-owned enterprises is 'the preference to forego short-term gains for long-term interests'. As such, they are, 'less inclined to take great risks for short-term benefits'.

'Family-owned companies also tend to manage their capital and assets judiciously. Perhaps we should see how the banking industry can take a leaf from such companies.'

Mr Wee's comments come just days after he was questioned at the UOB AGM last week about additional fees paid to him.

At the AGM, a shareholder asked Mr Wee how the bank's remuneration committee decided to pay him $2.5 million. In reply, Cham Tao Soon, UOB independent director and member of the remuneration committee, said Mr Wee was not present when his pay was discussed.

Prof Cham said the committee discussed the role Mr Wee played in the bank, as chairman of its exco and, in particular, his oversight of risk management. 'The company and the board get the advantage of his wisdom and experience,' said Prof Cham. 'We offered him $3 million as in the past year, but he reduced it to $2.5 million.'

Prof Cham said the committee did consider not paying Mr Wee, but felt that the amount was fair.