The archbishop of Canterbury has called on bankers to show an "inner discipline" in determining pay deals.
Justin Welby described meeting a bank boss who had told him how hardly anyone he employed earned £3m any more. He said: "There will always be greed. We are never going to get rid of human nature. We'd all like more money. I'd like more money … We'd all like that but what is necessary is the inner discipline that says, no, that's not the appropriate way of thinking, behaving, working, living."
In a lecture covering a wide range of issues relating to the banking industry, Welby called on banks to take a broader approach to social values. He also warned about the potential dangers of the shadow banking sector and the fact that markets will always move faster than regulators.
Having set out to put payday lenders out of business by helping credit unions expand, the archbishop admitted being concerned that some individuals could be driven to loan sharks until the credit union movement expanded further. "There is a danger of a gap in the market," he said.
He described "the elephant in the room" as the failure to address the issue of whether banks were still too big to fail and might need taxpayer bailouts as they did in 2008.
He was addressing an event in Westminster organised by the New City Agenda thinktank, which is backed by Lord McFall who sat on the parliamentary commission on banking standards. The commission was set up after Barclays was fined £290m for Libor rigging.
Welby has previously endorsed attempts by Barclays boss Antony Jenkins to change the culture of the bank and said he was confident that bank bosses were committed to change but that it was "a very long and very difficult process".
In remarks that appeared to be aimed at Barclays, Welby said it was difficult for banks to change their pay structure if they had big investment banking arms. Earlier this year Jenkins said he feared a "death spiral" if he did not hand out bigger bonuses in a move that led to a row about pay at its annual meeting.
A year ago, Welby had spoken to a City audience at a debate on the future on banking in which he called for banks to operate with a "fear of hell and the hope of heaven" and for banks to be "good". Then he had criticised the City over a culture of entitlement, which left it disconnected from "what people saw as reasonable in the rest of the world".
In his latest remarks on banking, Welby described JP Morgan – a bank which has had to pay multibillion-dollar fines since the financial crisis – as a professional bank but one that would cause concern if it were to run into difficulty.
Describing attempts by UK banks to convince the government not to back the parliamentary commission on banking standards' recommendation for a 4% leverage ratio, Welby added: "It is six years since the crisis, fewer than half of the dealers will have been in the post the last time there was a major run on the bank. That has a massive effect on culture. As time goes by the impetus for change diminishes."
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