UK: banks must limit bonuses, say Tories
October 27, 2009
By Kitty Donaldson London
The UK government had to follow US President Barack Obama's lead and ensure bank bonuses this year were awarded in shares and not cash, George Osborne, the treasury spokesman for the opposition Conservative Party, said yesterday.
Speaking to economists in London, Osborne called on retail banks supported by taxpayer funding to use the money that would have gone to bonuses to support new lending for British consumers and businesses.
"The cash that would have been paid out should be put on to banks' balance sheets explicitly to support new lending," Osborne said. "Where banks do want to pay bonuses this year to those senior staff who have earned them, those bonuses should take the form of new equity capital - shares in the business."
Legislators in all parties have appealed to banks to restrain the bonuses they pay to staff after the government orchestrated a rescue package for banks including Royal Bank of Scotland and Lloyds Banking Group last year.
Osborne said a limit on cash bonuses for executives should be a condition of the government's continuing support.
He asked Chancellor of the Exchequer Alistair Darling and Britain's financial services watchdog, the Financial Services Authority, to combine forces to achieve this aim
He appealed to voters who were angry that the bailout was saddling taxpayers with potential liabilities equivalent to a year's economic output in the UK.
In a report published last week the Centre for Economics & Business Research said bonuses for financial services staff might rise by 50 percent to £6 billion (R73bn) this year.
Osborne used the US administration as an example of how bankers' bonuses should be tackled, with the pay of "top bankers cut by 90 percent" and US banks being "told to pay out in shares instead", he said.
"America is acting," Osborne said. "Britain at the moment is not."
The Conservatives are leading the ruling Labour Party in public confidence on the economy by a margin of 4 percentage points, or 31 percent to 27 percent, a ComRes poll published on Friday showed. - Bloomberg
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