Alistair Darling will be keeping a close eye on banks’ response to the upcoming reforms on remuneration.

Five of the UK’s biggest banks have agreed to lead the way in bank remuneration reforms, which have been at the centre of the G20 summit in Pittsburgh, US.

The banks – Barclays, HSBC, Lloyds, RBS and Standard Chartered – have confirmed their commitment to meet the terms of the FSA Rule on remuneration, which comes into force on 1 January 2010, and which is also in line with the G20 agreement.

The Chancellor, Alistair Darling, said: “It is vital that our financial services industry remains at the forefront of the industry globally and take a responsible and long-term approach to remuneration.

“I am therefore pleased that the main banks incorporated in the UK have agreed to lead the way in implementing the agreement reached on bank remuneration at the G20, and expect them to set the standard for all other UK and international financial institutions to follow.”

The concern that has been raised by several partners at the advisory services PricewaterhouseCoopers (PwC) is that if regulations are too restricted, the UK may lose its banking talent to other less regulated countries.

Tom Gosling, Reward Partner at PwC, commented: “We need a level regulatory playing field across the G20 countries, as, in a competitive and genuinely global market for talented individuals, banks cannot afford to adopt compensation practices that are less favourable than those enforced by regulators elsewhere.

“Talent would fly to the least regulated market, particularly among the rich economies.”

The five UK banks at the centre of the G20 bonus reforms issued a joint statement echoing similar concerns, but welcome the policies in order to ensure all banks are equal.

The statement said: “In a competitive and international business it is right to make sure that our staff are appropriately and competitively rewarded for sustainable, long-term performance.

“We therefore welcome the G20 remuneration reforms, and their global nature, as it is essential that banking reward is consistent with effective risk management and that there is parity both nationally and internationally on these issues.”