Sarbanes-Oxley leaves UK banks in disarray
Britain's biggest banks may be forced to stop making loans to their directors as a result of regulations set out in the Sarbanes-Oxley Act.
One bank, Abbey National, has already stopped making loans to directors, while others like Lloyds TSB, Barclays and the Royal Bank of Scotland Group are understood to be seeking advice on how to comply with the legislation, according to a report in the FT.
The new corporate governance laws, introduced following WorldCom and Enron, ban companies with a US listing from making loans to their directors – only US banks are exempted from this law as they are regulated by the Federal Reserve.
Under the ruling, the banks have to unbundle their internal loan-making arrangements, although the US Securities & Exchange Commission is believed to be considering granting some exemptions to non-US companies.
The British Bankers Association is lobbying the US to redress this anomaly, the FT said.