Downing Street Says » Bank Bonuses

Asked if the Prime Minister was attracted to President Obama s idea of there being a ceiling on remuneration for bank chiefs in institutions that had a public stake, the Prime Minister s Spokesman (PMS) told the assembled press that the Prime Minister had said in his press conference earlier that in October, we set out the principles for remuneration for executives as part of the recapitalisation of banks.

In addition to that, when we established the Asset Protection Scheme, we retained the right to impose conditions on the level of senior executive compensation and those were subject to discussions with the banks.

Asked whether any of those proposals involved ceilings, the PMS repeated that that was subject to discussion between the Treasury and the banks. In October, we had set out the principles that there should be no rewards for failure, that there should be appropriate incentive structures for the future linked to long-term value creation and an appropriate level of executive pay.

Put that the proposals set out in October covered board level only, whereas President Obama had gone much wider than that and was there any suggestion that the UK might do the same, the PMS replied that on the detail of this, people should talk to the Treasury, but it was captured by the second point; incentive schemes across the banks should be linked to long-term value creation.

Put that that was not an Obama-style bank-wide cap, the PMS said that the Obama administration had announced their policy in relation to remuneration and we had done the same in relation to ours, in October.

Asked repeatedly if there would be any consideration of a more widespread implementation similar to that proposed by President Obama, of limiting the pay of thousands of executives, the PMS said that the discussions on this and the implementation of the principles of remuneration were subject to discussion with the banks and the Treasury.

Asked whether the Treasury was looking at the specific scheme proposed by President Obama, the PMS said that these were necessarily discussions that needed to happen between the Treasury and the banks themselves, so that we could best achieve our goal, which was a new approach to remuneration that didn t reward failure but did reward long-term value creation and took account of risk. The PMS repeated that on the detail of the discussion between the Treasury and the banks, people should speak to the Treasury.

Asked if the discussions between the Treasury and the banks could conceivably end up with an American-style system, the PMS replied that he was not going to predict what the outcome of those discussions might be.

Asked why the discussions were taking so long and why there wasn t firmer leadership by the UK on the issue, the PMS replied that we were demonstrating quite clearly firm leadership, given that we set out these principles in October. These were complex issues and it was important that we got the right answer.

5 Comments »

These bonuses are disgraceful and Gordon Brown is dragging his heels when he doesn’t curb them.

These bankers should be in Jail.

Ray
Comment by Ray Davis — 8 Feb 2009 on 9:24 pm | Link
Bonuses should not be considered as part of normal earnings as they should only be paid from profit. If there is no profit, no one in the company (or bank) should be paid a bonus. Junior staff should be paid an appropriate salary for the work they do and should not have to rely on a bonus to “top up” their earnings. RBS lost billions of pounds – how can they even think about paying bonuses? Gordon Brown should not use “poorly paid” junior staff as an excuse to allow payment of bonuses. If they are not paid sufficiently for what they do, increase their salaries as necessary but do not pay bonuses until they are in prifit.
Comment by Roy Maisey — 8 Feb 2009 on 10:52 pm | Link
Why are bonuses paid to people in the finance sector? The usual answer is “Because we need to pay for the best people and to reward the work done.”

In the past few years, not just during the recent financial crisis, bonuses have been paid for ORDINARY work patterns and not for work which has been shown to be EXTRAordinary.

In hindsight, some of the bonuses have been paid for work which appeared to be excellent in the short term but which turned out to be disastrous in the longer term.

Perhaps the financial sector should work under the same conditions as most of the rest of the working population. The reward for good work is that you get to keep your job. Otherwise ………
Comment by May Cuthbertson — 8 Feb 2009 on 11:24 pm | Link
Ban all bonuses to Bank employees who pay more than 20% in tax.

This will ensure that lower paid employees still get a bonus to make up their wages and the higher paid employees typically senior staff and Management do not get a bonus as a god given right.

These are the people who helped get us into the mess the Country is in. Also, as the Banks are now largely Public owned the Public should have a major say on how the Banks are run
Comment by Chris English — 9 Feb 2009 on 12:28 pm | Link
Has anyone analysed the total amount of money”gone missing” vs.who got what? What % of the trillions went in bonuses
Comment by clive marett — 11 Feb 2009 on 11:51 am | Link

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» Thursday, February 5, 2009

Bank Bonuses

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