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Cameron Wants UK Banks to Pay Smaller Bonuses

Sunday, 09 Jan 2011 12:58 PM

British Prime Minister David Cameron said on Sunday he wanted banks to award smaller bonuses and understood the public's anger on the issue. "On the general, I want to see the bonus pool smaller than last year. On the specific Royal Bank of Scotland is owned by the government -- they should not be leading the way on bonuses they should be a backmarker," he told BBC TV's Andrew Marr show.

Cameron was referring to a story in The Sunday Telegraph newspaper which said that RBS's chief executive Stephen Hester would be awarded a bonus of 2.5 million pounds ($3.9 million).

It also said he was to be paid an overall salary of almost 7 million pounds this year.

Royal Bank of Scotland (RBS) said no decision had been taken on Hester's bonus, while a person familiar with the matter said any bonus was likely to be paid in shares, rather than cash, and could be deferred for several years.

Total bonuses are expected to fall this year due to lower profits at most investment banks.

The Centre for Economics & Business Research (CEBR) said in October that London's City financial services sector was set to pay out 7 billion pounds ($10.9 billion) worth of bonuses for 2010, down 4 percent from 2009.

Cameron said Hester's pay packet and bonus was "pure speculation" and that no annoucement had been made. But asked if the government could do something about inflated bonuses, including possibly vetoing them, he replied "absolutely".

The government has a stake of more than 80 percent in RBS and also owns a large minority of Lloyds Banking Group after rescuing both groups in the financial crisis.

Cameron said he was determined the tax payer "gets its money back from those banks and that means they've got to be successful banks ... and I want to be able to sell them back into the private sector to pay the tax payer back their hard earned money."

Cameron said the government would not be able to achieve that if they were continuously micro-managed.

The prime minister warned against "banker-bashing" saying it was too easy to make banks scapegoats for the recession, but said he understood the public's anger.

"I feel it because, frankly, the whole country suffered from irresponsible lending practices from irresponsible behaviour. We need to recognise though that there are a lot of people to blame for mess that we are in."

The British Bankers' Association (BBA) said on Friday the industry "absolutely understands concern over pay" and that banks had been meeting regularly with government, including cabinet ministers, to discuss pay and other issues.

Industry sources have said an agreement on restraining pay could be made alongside making a commitment to small business lending.

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British Prime Minister David Cameron said on Sunday he wanted banks to award smaller bonuses and understood the public's anger on the issue. On the general, I want to see the bonus pool smaller than last year. On the specific Royal Bank of Scotland is owned by the...
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2011-58-09
 

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