Church of England Turns Its Wrath on Corporate Greed, Big Banks

Thursday, 25 Apr 2013 07:45 AM

By John Morgan

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The Church of England has declared war on bad corporate behavior and is using its considerable economic clout to flog executives who claim excessive bonuses and to call for the breakup of big banks.

The shareholder-friendly crusade is being led by the new Archbishop of Canterbury, Justin Welby, a former oil company executive who sees a role for activism in the modern church.

Welby, who is the spiritual head of Anglican denominations worldwide, including the Episcopal Church in the United States, believes radical changes are needed in banking, according to the Daily Mail.

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“What we are in at the moment is not a recession but is essentially some kind of depression,” he declared at a Bible Society debate on ethics in finance.

“We need a revolution in the aims of banks so they exist to serve the society they are in. Companies are not self-regarding things to maximize returns for shareholders.”

Welby suggested state-backed Royal Bank of Scotland and Lloyds Banking Group be broken up into a “good bank” with lending assets, and a “bad bank” that would hold non-performing toxic assets.

He also said regional banks can serve their communities better than large banks can, the Daily Mail reported.

Welby sits on Parliament’s powerful banking committee that is reviewing the conduct of banks in the financial crisis.

In one of its first major announcements since he was enthroned last month, the Church of England said it would vote in the committee against corporate bonuses that exceed 100 percent of base salary.

“Businesses are vehicles for wealth creation, without which there can be no wealth distribution. However, businesses cannot contribute to their full potential to a good society and human flourishing if they have no regard for the society in which they operate, and if individuals in business have regard only for themselves,” the church said in a statement.

Edward Mason, secretary of the church’s ethical investment advisory group, said bonuses are now at 200 percent of salary at the top 30 companies in the FTSE 100 Index.

"We think annual bonuses have got out of hand and they've come to be seen as an entitlement and they encourage executive short-termism," he said.

The church has deep financial resources, including about $12 billion worth of investments spread across roughly 2,000 companies, including Royal Dutch Shell, Vodafone Group, BP, Unilever and HSBC, according to The Globe and Mail.

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