Downing Street Says

Asked if the Prime Minister was confident that there would be restraint at RBS concerning bonuses and if he was concerned that the opposite could happen at Lloyds, the PMS said that there was an agreement between the Government and RBS, which included the following conditions regarding bonuses: no cash bonuses would be paid to any staff this year earning over 39,000, so staff in branches would not be affected, and Executive Board members would have any bonus deferred until 2012 and subject to clawback.

With regards to Lloyds the exact same principle applied. Every UK bank had to agree their bonus arrangements with UK Financial Investments and the Financial Services Authority (FSA).

Put that there had been reports today that Lloyds would be paying out big bonuses this year, the PMS said that issues regarding payouts at Lloyds should be put to them but the Government’s position was clear. We had in place a bonus system going forward that was based on three principles; no claw back, heavy restraints on the cash element of bonuses and the deferral of bonuses until 2012.

Asked if the Prime Minister was concerned that banks like Barclays would be able to get around the restraint on bonuses by increasing pay, the PMS said that we wanted to retain a competitive banking market in the UK, which involved the issue of remuneration, but there was no denying that the old system did not work. How individual banks determined their remuneration systems was not something the Prime Minister would comment on. Lord Myners said yesterday that it was for the shareholders to take up remuneration polices with the banks.

Asked if banks would be able to pay big bonuses this year as the new proposals didn’t take effect until next year, the PMS said that banks would be held to account for their current bonus systems. Banks had to talk to the FSA about any bonuses that would be paid next year.

Asked if the Prime Minister understood peoples’ anger about banks paying their staff bonuses, the PMS said that the Prime Minister understood the public concern about banks.

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» Friday, December 4, 2009

Banks

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