The Business Secretary, Lord Peter Mandelson, today stepped into the debate surrounding the payment of bonuses to city bankers.
The London Evening Standard today reported that despite pleas from the government for banks to show restraint in awarding large end-of-year bonuses, around 5,000 bankers will receive bonuses of £1 million or more.
The Royal Bank of Scotland confirmed that “many hundreds” of its bankers are among those to be paid bonuses this year, and defended its position, remarking that if it were not to pay competitive salaries then they would loose a lot of their top talent to their competition in the city. Lord Mandleson concurred with the RBS directors’ position today, stating that “They say they have to remain competitive in the market in recruiting senior executives and that’s why it’s important that all the banks are equally restrained and that RBS is not singled out.”
RBS has been the target of much criticism recently over its plans to award large bonuses, despite the bank having having received a bailout of £45 billion from the Treasury this year and being 84 per cent owned by the british taxpayers.
The Labour government has come under considerable public pressure to stop such large payouts in the financial sector, particularly as many are angry at the size of bonuses in an industry only recently bailed out by the treasury using taxpayers funds.
RBS board members are believed to have sought legal advice as to whether they could resign if the ‘bonus pool’ were effectively seized by the government by ministers vetoing payments. But earlier today, Lord Mandelson said: “The Government’s view on this is very clear. There has to be restraint exercised by all the banks.”
Defending his decision, Lord Mandleson said: “we’re engaged in a tough discussion with the banks because they live and operate in a competitive market, they’ve got to compete with other banks not just here in the UK but in Europe, and also internationally - and that’s why it’s important that we see a harmonisation of these rules, not to single out particular banks, but to make sure that all the banks are showing the sense of perspective and restraint when it comes to paying bonuses.”