Downing Street Says

Asked if the Government was being held to ransom by RBS due to the threat of mass resignation from the bank, the PMS said that the Prime Minister had said at the press conference this morning that we now had a worldwide approach to bonuses instigated at the G20 meeting. The UK had decided to legislate to enforce the new approach to bonuses. We needed a balance between responsible banking and the need to give people incentives. The UK Financial Investments (UKFI) effectively held the Government shares and it was best to talk to them for details, but we were clear that we would never go back to the old bonus culture.

Put that the Government did not want this whole thing to blow up before a general election, the PMS said that the behaviour that some of the banks undertook at the height of the financial boom was irresponsible and there was now global understanding that we could not continue with that kind of counter-productive system. There were no political motivations; this was about a new structural approach to banking and a reform of regulation.

Put that Goldman Sachs was paying out record bonuses and asked if the Government was concerned that there would be a drain of talent from RBS, the PMS said it was not for the Government to comment. It was important to remember that all UK based investment banks had said that it would agree to the Government’s bonus principles. The Prime Minister felt that banks could keep the best talent within a framework of responsible banking.

Asked if the Government would use its right to veto bonuses, the PMS said that it was for the UKFI to deal with RBS on the specifics of bonuses; it was not for the Government to get involved in matters relating to individual banks.

Asked if Ministers would intervene, the PMS said that the Government had put in place appropriate legislation in the Financial Services Bill.

Asked if the Prime Minister was confident that the RBS board would not resign, the PMS said that it was for RBS to determine how it took forward its business.

Put that Lord Mandelson had said this morning that RBS should not be singled out and that he understood the position of bankers, the PMS said that the Prime Minister agreed with the comments Lord Mandelson made this morning; we should not single out specific banks because every bank should sign up to the new approach to bonuses. The Prime Minister believed that banking was an important part of the UK economy; responsible banking was essential and part of responsible banking was making sure that banks behaved in the right way, as well as being commercially successful.

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» Thursday, December 3, 2009

RBS

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