» Thursday, February 5, 2009


Asked if the Prime Minister understood people s anger at the bonuses being paid by RBS, and did he support President Obama s idea of capping salaries, the Prime Minister s Spokesman (PMS) replied that there had been comments from Lord Mandelson this morning on this, and it was important as well to reiterate where we were. As a majority shareholder in RBS, UK Financial Investments was in discussions on possible approaches to remuneration, and no decisions had yet been taken. A proposal would only be supported by UK Financial Investments if it was fully consistent with taxpayers interest. We had already taken action in relation to board pay as part of the recapitalisation programme. In terms of capping executive pay, we had already said that there needed to be a new approach to the reward for senior banking executives, and we made that one of the central conditions for the support that we gave in October, where we set out three separate issues one was that there should be no rewards for failure, second that there should be appropriate incentives structures in future that linked incentive schemes with long-term value creation, which take account of risk, and the third was that there should be an appropriate level of executive pay for the future.

Put that in October all the talk was about board level pay, when actually the people who made the serious money in bonuses were not at board level but relatively junior traders, the PMS replied that as he had said, in relation to this particular case of RBS, no decision had been taken, and through UK Financial Investments we were in discussions with the bank. But he was not going to pre-judge the outcome of what that would be.

Asked if it was being left to UK Financial Investments or were Ministers involved, the PMS replied that in terms of the contact between UKFI and the Treasury, it was best to speak to the Treasury.

Asked when these discussions would be completed, the PMS replied that he did not have a timeframe for that.

Asked that given the Prime Minister welcomed President Obama s fiscal stimulus, did he as warmly welcome the President s cap on executive pay, the PMS replied that we had already set out our views on executive pay, and we would strongly agree with President Obama that a new approach was needed for senior executives.

Asked if as part of the Government s raft of measure introduced a few weeks back, was it the case that some of those would have links to executive pay, the PMS replied that for example on the Asset Protection Scheme, we retained the right to impose conditions on the level of senior executive compensation. So the answer to the question was yes.

Asked if the Government was satisfied with the US Bill that was emerging from the Senate, the PMS replied that as we had said over the past couple of days, this process was still ongoing in the United States and we would wait for the final outcome.

Put that the Prime Minister had talked about the dangers of banks withdrawing foreign lending, and asked if he was troubled that RBS was reportedly considering pulling back its foreign lending, the PMS replied that the Prime Minister set out his view on the importance of ensuring that there was sufficient lending that could be accessed by business both from domestic and international banks. But specifically on RBS we should not be giving a response right now.

original source.

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