Downing Street Says

Asked if the other senior members of the RBS team should also renege on their bonuses, the PMS said bonus arrangements had been put in place by the previous administration, RBS was left in a complete mess and it was important that the RBS management team got on with the job. Progress is being made and decisions on bonuses are for the RBS Board.

Asked if these arrangements were right, the PMS said that it was important that targets set for RBS were met and banks were put on a more sustainable footing. RBS had been too big and too risky and must now act in the interests of taxpayers. There would be no micromanaging but government has taken action so bonuses are lower, a fraction of what they were. We have placed a limit on cash bonuses for RBS and Lloyds, and made it clear that the bonus pool must be lower again. The PMS referred the assembled media to the Business Secretary’s proposals and action Government had taken to reform the whole system.

Put that lending from RBS, particularly to small businesses was down, the PMS said that RBS have significantly increased their lending to businesses up 30% to businesses and up 6.5% to SMEs in the first nine months of 2011 compared to the previous year. RBS lent 50.3 billion to businesses of which 23.6 billion was to SMEs in the first nine months of 2011, clearly the RBS Board had taken that into account.

Put that Vince Cable said that Hester surrendering his bonus should set the tone’, the PMS replied that whether to accept a bonus or not was a matter for individuals, but it was important that bonuses were much lower and measures were in place to limit them.

Asked if the Prime Minister (PM) had misjudged the situation, the PMS said that the PM had expressed his view last week; he wanted bonuses to be lower and said it was a matter for Hester if he took the bonus or not.

Put that there was a threat that the RBS management team might walk out, the PMS said the team did a difficult job and they were making good progress. They had reduced the balance sheet by around half a trillion. There have been significant changes but RBS has to be stronger and more sustainable before it moves to full private sector ownership.

Asked if there was a fear that Hester might leave or be poached, the PMS said she would not speculate but what was important was that the bank was viable going forwards.

Asked why people received bonuses, the PMS said that it was a matter for the Board who received bonuses.

Asked if the intervention by Labour was welcome, the PMS replied that the Government had made its position clear, bonuses should be responsible and we have taken action to achieve that. Reward for good performance was not a bad thing but should reflect the current climate and be responsible.

Asked if the PM or other ministers had spoken to Hester or the Board, the PMS said that she was not aware of any conversations, and reminded the assembled media that the Government’s shareholding is managed by UKFI (UK Financial Institutions) and they speak to the Board.

Asked if any conversations had taken place with UKFI, the PMS referred the media to the Treasury.

Asked to define micromanaging’, the PMS said that UKFI acts for Government in dealings with the management Board. It was not the role of Government to look at individual’s bonuses that was a role for the Board and the Government wouldn’t take the place of the Board.

Asked if the same approach would be taken with Lloyds, the PMS said it would be the same process.

Asked if the bonus was mandatory, the PMS said that it would be a matter for the Board to decide whether a bonus would be awarded.

Asked if the Government was happy with the arrangements with UKFI, the PMS said the Government was happy to follow the process and there were no plans to change current arrangements.

Asked if RBS were public sector staff or private sector staff, the PMS referred the media to the Treasury.

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» Monday, January 30, 2012

Bonuses

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