European banking sector 'facing next phase of reform efforts'

Banks across Europe will come under renewed pressure to reform and improve their operating principles in the coming months.

A new report from KPMG has noted that performance among Europe's largest financial organisations has declined in recent years as disillusionment with traditional operating models sets in.

Bill Michael, UK head of financial services at KPMG, stated that the operating climate has changed in a way that will mean that excessive bonuses and opaque pay calculations will no longer be tolerated.

The onus is now upon the banks themselves to reform and modernise their business principles to regain the confidence of shareholders and the public.

Mr Michael said: "Banks must encourage greater transparency in accounting and reporting practices to help restore public and investor confidence in the sector."

Last month, a report from GfK suggested that the ongoing banking crisis is largely to blame for impairing economic growth in the EU during the second quarter of 2012.