09-02-2009, 12:34 PM
As public pressure mounts about bank bosses paying themselves big bonuses with taxpayer funds the Chancellor reacts decisively and authorises a probe.
http://news.bbc.co.uk/1/hi/business/7877161.stm
Chancellor warns RBS over bonuses
Chancellor Alistair Darling has told RBS failure should not be rewarded with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
It comes as reports put the potential total bonus figure at up to £1bn for the company's 177,000 workers.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
Opposition parties have expressed anger that his final recommendations may not come until the end of the year.
Sir David, a former executive director of the Bank of England and former chairman of the Securities and Investments Board, he is now a senior adviser at Morgan Stanley International.
His preliminary conclusions are not due until the autumn and final recommendations by the end of 2009.
The timescale fuelled complaints from opposition parties that the Treasury response was too slow.
Shadow chancellor George Osborne said it was "inadequate" and the review would come "far too late" to do anything about this year's bonuses.
Lib Dem treasury spokesman Vince Cable said: "Instead of dealing decisively with the problem, as President Obama, the Swiss and others have done, the government is clearly playing for time in order to avoid doing anything to upset the bankers."
The independent investigation will also look at the pay and bonuses of top executives in the industry.
"The chancellor feels he has the right to limit bonuses and set conditions on pay at any bank propped up by us, by taxpayers, which broadly includes all British banks, since they've all received exceptional loans and guarantees from taxpayers over the past few months," said BBC business editor Robert Peston.
'Absolute minimum'
Banks were said to be looking to pay a fraction of last year's bonuses.
But the scale of the reported pay-out at RBS has caused an outcry, after the company had to be taken into 68% public ownership at a cost of £20bn in taxpayer money.
RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
In January RBS said it was heading for a record loss, and expected to report a deficit before write-downs of between £7bn and £8bn for 2008.
Mr Darling told BBC One's Andrew Marr Show that "no figure on bonuses has been agreed on" but said he had told RBS no-one associated with the losses should be rewarded.
"I have spoken to the chief executive of RBS, and made it quite clear - and he agrees - that no-one associated with these huge losses should be allowed to walk away with large cash bonuses," Mr Darling told the programme.
But he added: "Obviously there are contractual problems with some staff. And... if you look at your average teller, they're not terribly well paid, and no-one would quarrel with making sure they are properly rewarded."
He said that in the past a bonus was a reward for hard work or extra effort, but was now seen as a right by bankers.
He added that the bank wanted "to make sure they cut down these payments to the absolute minimum they have to."
"They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect."
'Burst'
The shadow chancellor told the Andrew Marr Show: "The party is over for the banks.
"For senior management, cash bonuses at a time like this for people who have been involved in the higher echelons of a bank is simply unacceptable."
Mr Osborne added that there had to be a new economic model, and that "the bankers and indeed the government have to understand you can't just reflate the balloon that burst".
Referring to the Treasury inquiry, he also questioned the need for "yet another review".
Liberal Democrat party leader Nick Clegg told the BBC's Politics Show: "You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no."
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Incentives
Meanwhile, former deputy prime minister John Prescott, who runs an online grassroots banking campaign, said: "We are all [RBS] shareholders now and the shareholders demand you give up the bonus."
One of the key issues that will be examined in the Treasury review is the extent to which financial incentives encourage bankers to take risks.
Mr Darling said that it would be wrong to reward people whose excessive risk-taking brought the banks down.
Angela Knight, chief executive of the British Bankers' Association, said the size of bonuses was likely to come down in future.
"They have seemed very high," she said. "What I will say is that I don't think you'll see those again."
She added: "Looking at very detailed as well as general changes to remuneration structures is something that the banks are already doing."
Last week US President Barack Obama announced a $500,000 (£355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.
===============
http://news.bbc.co.uk/1/hi/uk_politics/7878418.stm
Brown talks tough on bank bonuses
The culture of rewarding bankers for failure and short term gain is being "swept away", Gordon Brown has said.
Labour would "aggressively" pursue action to ensure that future rewards for bankers were based on "long-term success" and failure was penalised.
The government is under pressure amid reports RBS Group, in which it holds a major stake, could pay £1bn in bonuses.
The Tories said ministers were "asleep on the job" on the issue while the Lib Dems said the response was "pathetic".
Speaking in London, Mr Brown said: "We are leading the world in sweeping away the old short term bonus culture of the past and replacing it with a determination that there are no rewards for failure and rewards only for long-term success."
"In the future there must be rewards for success - but long-term sustainable success and not just short-term gains."
Earlier, Treasury minister Yvette Cooper said any contractual or legal obligations on banks to pay bonuses at a time when they were making huge losses must be "challenged".
'Moral responsibility'
"We have made very clear that as major shareholders in these banks we won't accept bonuses for failure," she told the BBC. "These do need to be curtailed."
Ms Cooper said there was "a lot to be said" for going down the same route as the US and banning future cash bonuses for bank staff but said bankers should also look to their own actions.
"I think there is a moral responsibility on some of these bankers, even if they are legally entitled to take bonuses, at a time when the bank is only still standing because of government intervention and why I think there is an important issue of needing to restore trust in the city, senior executives need to take responsibility and consider whether they should be taking bonuses."
Chancellor Alistair Darling said on Sunday the RBS Group should not reward staff with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
The timescale of the Walker review has fuelled complaints from opposition parties that the Treasury response was too slow.
'Outrageous'
Tory leader David Cameron said the review was "much too late in coming" and that he had been warning about the dangers of excessive bonuses for many months.
"It does appears that the government has been completely asleep at the wheel," he said.
For banks now owned by the taxpayer, future bonuses should consist of shares not cash and only be paid out when much of the investment made by the government had been repaid.
Executives at RBS needed to "recognise the fact" that the bank would have not survived in its current form if the government had not stepped in, he added.
"As the principal shareholder, you are able to say what is and what is not acceptable."
"It is outrageous for taxpayers to put £20bn into banks to see a billion of that used to pay out bonuses," he said.
The Lib Dems said that instead of dealing "decisively" with the problem, the government was "playing for time" in order not to upset the banking industry.
"You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no," said the party's leader Nick Clegg.
The independent investigation will also look at the pay and bonuses of top executives in the industry.
'Absolute minimum'
Under the terms of October's bank-bailout, no board directors at partly state-owned firms will receive any cash bonuses this year.
But the scale of the reported pay-out at RBS, in which the government holds a 68% stake, has caused an outcry and led to calls for an across the board ban on bank bonuses.
RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Former deputy prime minister John Prescott has said that as shareholders, the public demands that bankers give up their bonuses.
Last week US President Barack Obama announced a $500,000 (£355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.
http://news.bbc.co.uk/1/hi/business/7877161.stm
Chancellor warns RBS over bonuses
Chancellor Alistair Darling has told RBS failure should not be rewarded with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
It comes as reports put the potential total bonus figure at up to £1bn for the company's 177,000 workers.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
Opposition parties have expressed anger that his final recommendations may not come until the end of the year.
Sir David, a former executive director of the Bank of England and former chairman of the Securities and Investments Board, he is now a senior adviser at Morgan Stanley International.
His preliminary conclusions are not due until the autumn and final recommendations by the end of 2009.
The timescale fuelled complaints from opposition parties that the Treasury response was too slow.
Shadow chancellor George Osborne said it was "inadequate" and the review would come "far too late" to do anything about this year's bonuses.
Lib Dem treasury spokesman Vince Cable said: "Instead of dealing decisively with the problem, as President Obama, the Swiss and others have done, the government is clearly playing for time in order to avoid doing anything to upset the bankers."
The independent investigation will also look at the pay and bonuses of top executives in the industry.
"The chancellor feels he has the right to limit bonuses and set conditions on pay at any bank propped up by us, by taxpayers, which broadly includes all British banks, since they've all received exceptional loans and guarantees from taxpayers over the past few months," said BBC business editor Robert Peston.
'Absolute minimum'
Banks were said to be looking to pay a fraction of last year's bonuses.
But the scale of the reported pay-out at RBS has caused an outcry, after the company had to be taken into 68% public ownership at a cost of £20bn in taxpayer money.
RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
In January RBS said it was heading for a record loss, and expected to report a deficit before write-downs of between £7bn and £8bn for 2008.
Mr Darling told BBC One's Andrew Marr Show that "no figure on bonuses has been agreed on" but said he had told RBS no-one associated with the losses should be rewarded.
"I have spoken to the chief executive of RBS, and made it quite clear - and he agrees - that no-one associated with these huge losses should be allowed to walk away with large cash bonuses," Mr Darling told the programme.
But he added: "Obviously there are contractual problems with some staff. And... if you look at your average teller, they're not terribly well paid, and no-one would quarrel with making sure they are properly rewarded."
He said that in the past a bonus was a reward for hard work or extra effort, but was now seen as a right by bankers.
He added that the bank wanted "to make sure they cut down these payments to the absolute minimum they have to."
"They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect."
'Burst'
The shadow chancellor told the Andrew Marr Show: "The party is over for the banks.
"For senior management, cash bonuses at a time like this for people who have been involved in the higher echelons of a bank is simply unacceptable."
Mr Osborne added that there had to be a new economic model, and that "the bankers and indeed the government have to understand you can't just reflate the balloon that burst".
Referring to the Treasury inquiry, he also questioned the need for "yet another review".
Liberal Democrat party leader Nick Clegg told the BBC's Politics Show: "You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no."
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Incentives
Meanwhile, former deputy prime minister John Prescott, who runs an online grassroots banking campaign, said: "We are all [RBS] shareholders now and the shareholders demand you give up the bonus."
One of the key issues that will be examined in the Treasury review is the extent to which financial incentives encourage bankers to take risks.
Mr Darling said that it would be wrong to reward people whose excessive risk-taking brought the banks down.
Angela Knight, chief executive of the British Bankers' Association, said the size of bonuses was likely to come down in future.
"They have seemed very high," she said. "What I will say is that I don't think you'll see those again."
She added: "Looking at very detailed as well as general changes to remuneration structures is something that the banks are already doing."
Last week US President Barack Obama announced a $500,000 (£355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.
===============
http://news.bbc.co.uk/1/hi/uk_politics/7878418.stm
Brown talks tough on bank bonuses
The culture of rewarding bankers for failure and short term gain is being "swept away", Gordon Brown has said.
Labour would "aggressively" pursue action to ensure that future rewards for bankers were based on "long-term success" and failure was penalised.
The government is under pressure amid reports RBS Group, in which it holds a major stake, could pay £1bn in bonuses.
The Tories said ministers were "asleep on the job" on the issue while the Lib Dems said the response was "pathetic".
Speaking in London, Mr Brown said: "We are leading the world in sweeping away the old short term bonus culture of the past and replacing it with a determination that there are no rewards for failure and rewards only for long-term success."
"In the future there must be rewards for success - but long-term sustainable success and not just short-term gains."
Earlier, Treasury minister Yvette Cooper said any contractual or legal obligations on banks to pay bonuses at a time when they were making huge losses must be "challenged".
'Moral responsibility'
"We have made very clear that as major shareholders in these banks we won't accept bonuses for failure," she told the BBC. "These do need to be curtailed."
Ms Cooper said there was "a lot to be said" for going down the same route as the US and banning future cash bonuses for bank staff but said bankers should also look to their own actions.
"I think there is a moral responsibility on some of these bankers, even if they are legally entitled to take bonuses, at a time when the bank is only still standing because of government intervention and why I think there is an important issue of needing to restore trust in the city, senior executives need to take responsibility and consider whether they should be taking bonuses."
Chancellor Alistair Darling said on Sunday the RBS Group should not reward staff with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
The timescale of the Walker review has fuelled complaints from opposition parties that the Treasury response was too slow.
'Outrageous'
Tory leader David Cameron said the review was "much too late in coming" and that he had been warning about the dangers of excessive bonuses for many months.
"It does appears that the government has been completely asleep at the wheel," he said.
For banks now owned by the taxpayer, future bonuses should consist of shares not cash and only be paid out when much of the investment made by the government had been repaid.
Executives at RBS needed to "recognise the fact" that the bank would have not survived in its current form if the government had not stepped in, he added.
"As the principal shareholder, you are able to say what is and what is not acceptable."
"It is outrageous for taxpayers to put £20bn into banks to see a billion of that used to pay out bonuses," he said.
The Lib Dems said that instead of dealing "decisively" with the problem, the government was "playing for time" in order not to upset the banking industry.
"You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no," said the party's leader Nick Clegg.
The independent investigation will also look at the pay and bonuses of top executives in the industry.
'Absolute minimum'
Under the terms of October's bank-bailout, no board directors at partly state-owned firms will receive any cash bonuses this year.
But the scale of the reported pay-out at RBS, in which the government holds a 68% stake, has caused an outcry and led to calls for an across the board ban on bank bonuses.
RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Former deputy prime minister John Prescott has said that as shareholders, the public demands that bankers give up their bonuses.
Last week US President Barack Obama announced a $500,000 (£355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.