EDITOR'S TAKE: The entirely foreseeable consequences of David Walker's pay review

Sometime this week, David Walker will release the much awaited final draft of his review of the banking industry.

When he does, he's expected to recommend that from now on banks in the City detail how many high earners they employ in different compensation bands. Under apparent pressure from the Treasury Walker has not included Paul Myners' proposal that these people also be named.

It won't be the first time the public has been let in on the way banks distribute pay.

Andrew Cuomo's publicly available report on Wall Street bonuses, released last July, shed light on how banks allocated their 2008 bonus pools.

However, making the release of this information a statutory requirement forevermore is a whole different matter, and is likely to result in -

1) Long and pointless hours speculating about who got what

"Bankers like to gossip," points out one senior employee at an Asian house. "It's bad enough when the compensation of executive committees is released in annual reports, but this will add a whole new dimension to pay chatter."

2) Internal outrage

The knowledge that 3 people at your firm received 10m last year is likely to be galling if you were a big producer and one of 10 people receiving slightly more than 1m. Cue disgruntlement, difficult compensation conversations in which it's no longer possible to claim that everyone's being made to suffer equally, and exits as a result.

3) External outrage

Walker hasn't said as much, but the purpose behind listing how many people received large pay cheques appears to be the naming and shaming of institutions displaying undue largesse. Expect protestors bearing placards outside the banks seen to make too many multi-millionaires.

4) Cherry-picking employers based on their egalitarianism/lack of it

If you're a sensible junior or mid-ranking person you might wish to work for a bank with comparatively few people in the upper echelons of the pay scale (assuming this implies that the bank distributes pay comparatively equally instead of not paying much overall).

Equally, if you're a senior person you might want to go for a bank whose comp distribution is weighted in favour of high earners - and to lever the knowledge that there are plenty of people earning >5m to increase your package.

5) Evasion

Walker's stipulations are only expected to apply to banks, not to unlisted hedge funds or boutiques. If the publication of pay scales provokes heightened public outrage, it could further encourage banks' high earners to defect to less heavily scrutinized areas of the industry.

Equally, banks may be encouraged to practice a little evasion of their own. It's not clear what Walker's definition of compensation will be. If it's just cash, expect large awards of stock which vests 30 seconds after issuance.