Downing Street Says » Bank Bonuses

Put that JP Morgan were announcing bonuses worth 27billion today while President Obama had urged other countries to curb excesses in banks and what was the Prime Minister’s view on this, the Prime Minister’s Spokesman (PMS) told the assembled press that we had made our position clear with the introduction of the bonus tax.

In relation to what President Obama had said last night, it was important to bear in mind that the interventions made by the UK and the US were very different. Their decision was to recoup the cost of their interventions while we took stakes in banks and therefore we expected to recoup that investment as the Prime Minister had made clear, by realising our investment at the right moment.

Asked what the Prime Minister’s view was on the 27billion payout, the PMS replied that the Prime Minister had not expressed opinions on individual banks. The Chancellor and the Prime Minister had laid out the terms through which a bonus tax in the UK would be applied. It was for the HMRC to take that forward in regard to individual banks.

Put that the Chancellor had made it very clear in the PBR that he saw the bonus tax as a warning to the banks to not pay bonuses rather than a good way to raise tax, the PMS said that it was about encouraging behaviour change as some of the excessive behaviour that we had seen in previous years was unacceptable. However, we had also said that this tax would raise around 500million. It was for the banks to determine whether or not they wanted to change their behaviour or accept the consequences.

Asked if there was any frustration that banks seemed to be blithely carrying on regardless, the PMS replied that it was for the banks to make their individual decisions about how they wished to respond. The bonus tax was only one part of what the Government was seeking to do; we had looked at governance, we had commissioned the Walker Report and there were the various G20 initiatives.

Put that this was a one-off measure that hadn’t changed behaviour and would we consider adopting the Obama-style levy, the PMS said that it was a very different situation.

Asked if there was any concern over the US levy on UK banks, the PMS replied that it was not for him to comment on the possible impact on UK banks based in the US.

Put that Lord Myners had effectively given the green light to RBS bonuses and wasn’t there a shift in the Government’s attitude towards bonuses, the PMS said that he wouldn’t characterise it in those terms. As the PMS understood it, Lord Myners had said that it was for the individual banks remuneration committees to determine what it was they needed to do by way of bonus payments.

As people would know, there were now measures in place that ensured that those banks that were part-owned by the Government had to go through an approval process for bonus payments.

2 Comments »

The bonus excesses must be curbed and the government
must be more decisive in its action.
Comment by L J Janas — 18 Jan 2010 on 2:34 pm | Link
I always thought bonuses were paid out of profits earned, not losses incurred. Like everything else the government has little or no control, or if it tries to take control as with Lord Myners (re F Goodwin pension) they make a cock up of it!
Comment by R FITCH — 22 Feb 2010 on 8:32 pm | Link

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» Friday, January 15, 2010

Bank Bonuses

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