Downing Street Says » Bankers Bonuses

Asked what mechanism the Government was using to make RBS aware of the Prime Minister’s views, the Prime Minister’s Spokesman (PMS) told the assembled press that he was sure that RBS would have heard what the Prime Minister and the Chancellor had said on the matter.

The PMS added that there was an established mechanism; UK Financial Investments (UKFI) had been exercising the shareholder role for the Government and they would be having discussions with RBS and he imagined those discussions were underway.

Asked whether the Chancellor would be speaking to UKFI, the PMS advised people to speak to the Treasury on that issue, but it was for UKFI to have that conversation with RBS.

On how the relationship had changed with RBS and other banks since the new Government had come in, the PMS said the approach was the same. The PMS said that more generally, since the election, we now had a Bank Levy, a statement of policy on taxation which made clear that we would maximise sustainable revenues from the banking sector, a new set of rules from the FSA on bonuses and a Banking Commission.

The PMS added that in terms of how the discussion between the Government and RBS took place, it was an established mechanism through UKFI which had been set up by the previous Government.

Asked if the Government was prepared to consider another tax on bank bonuses, the PMS replied that our policy on taxation of the financial sector was the policy set out by the Chancellor in the Spending Review, where he had said that banks should be making a fair contribution, but we should not be driving them abroad.

On whether the Government thought that the Bank Levy could raise more in taxes than a Bonus Tax, the PMS replied that the intention with the Bank Levy was to raise around 2.5bn per year. The Bonus Tax was introduced as a temporary one-off measure and if it were to be repeated, it could generate quite a lot of avoidance. The PMS said that he would not make a statement on future tax policy as that was a matter for the Chancellor.

Asked why there was a dip in revenue from the Bank Levy this year, the PMS advised people to speak to the Treasury.

Put that RBS said yesterday that the Government did not have a veto’, the PMS replied that the Government had a significant shareholding and we had a significant voice when it came to having discussions with RBS.

Put that the Prime Minister had said yesterday that he did have a veto’, the PMS said that a discussion between RBS and UKFI had begun and people should check with the Treasury on the precise arrangements.

Asked if it would be acceptable to the Government if Stephen Hester took his bonus fully in shares rather than in cash, the PMS replied that it would not be appropriate for him to comment on that specific issue.

Asked about bonuses being paid in shares as a general principle, the PMS replied that there were FSA rules now in place that encouraged a greater amount of bonuses to be paid in shares.

On whether he thought a Bonus Tax implemented this year would create more avoidance, the PMS said that it was a hypothetical question. One reason for making it a one-off had been that it would generate avoidance if repeated.

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» Monday, January 10, 2011

Bankers Bonuses

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