Cameron says banks 'should pay smaller bonuses'
- 9 January 2011
- From the section Business
Prime Minister David Cameron has called on banks to pay smaller bonuses this year.
Speaking on the BBC's Andrew Marr show he said banks should be more "socially responsible".
The Royal Bank of Scotland (RBS), which is majority-owned by the taxpayer, should not be "leading the way" on bonuses but should be a "back marker", he said.
However, "micro-managing" the banks was not the answer, he added.
There have been unconfirmed reports that RBS's chief executive, Stephen Hester, is to get a substantial bonus for his work in 2010.
The Sunday Telegraph reported that RBS's board is poised to award Mr Hester a cash-and-shares bonus of £2.5m at their meeting next month.
But Mr Cameron said the details of Mr Hester's pay packet was "pure speculation".
The BBC has learned that there have been only tentative discussions on Mr Hester's bonus and business editor, Robert Peston, said that any extra payment would almost certainly be in shares.
The British Bankers' Association (BBA) said new rules meant large cash bonuses were a thing of the past.
Its statement said: "For all the key people, bonus targets have to be agreed with the regulator, most of the bonus has to be locked away for several years and it can be clawed back.
"The smaller part of any bonus package may be paid straight away if the Financial Services Authority agrees, but as the rest is in shares which have to be retained for some time, any cash will go straight to the taxman. This is a tougher regime than any other country."
The Shadow Chancellor, Alan Johnson, speaking on Sky News, said the government had legislation on the statute books which would allow it to force the banks to publish details of bonuses of more than £1m, but had failed to do so.
Mr Johnson said: "On transparency they won't act on a law that is already there and on bonuses themselves Nick Clegg said they would not stand 'idly by'. It looks like they are standing 'idly by'."
Mr Cameron warned against "banker-bashing", saying that it was too easy to make banks the "scapegoats" for the recession.
But he said that the banks needed to do more to increase their lending.
He added: "What I want to see is socially responsible banks behaving responsibly, and proper agreements on lending to businesses, large and small."
He defended his government's action on banks, saying that his was one the first governments in the world to introduce a banking levy.