Amid reports that RBS’s chief executive is in line for a £2.5m bonus, Prime Minister David Cameron says the state-owned bank should be leading the way in awarding smaller bonuses.
Mr Cameron, appearing on BBC TV’s Andrew Marr Show, was responding to a story in today’s Sunday Telegraph, which said RBS Chief Executive Stephen Hester was in line to pick up a 2010 performance bonus of £2.5m – in addition to his £1.2 annual salary.
RBS was nationalised in between 2008 and 2009 as it teetered after acquiring Dutch bank ABN Amro ahead of the credit crunch.
The bank has said no decision has been taken on Mr Hester’s bonus. Mr Cameron agreed that the detail of Mr Hester’s bonus was “pure speculation”.
He said that rather than “leading the way” on bonuses in the City, RBS should be a “backmarker”. And asked if the government could do something about inflated bonuses, including possibly vetoing them, Mr Cameron replied: “Absolutely.”
The Prime Minister cautioned against “banker-bashing” but admitted he understood why the public were angry.
The whole country suffered from irresponsible lending practices, from irresponsible behaviour. Prime Minister David Cameron
“I feel it because, frankly, the whole country suffered from irresponsible lending practices, from irresponsible behaviour,” he said.
“We need to recognise, though, that there are a lot of people to blame for the mess that we are in.”
In October the Centre for Economics and Business Research said London’s financial services sector was set to pay out £7bn in bonuses for 2010, down 4 per cent on the previous year.
Towards the end of last year it was reported there would be no public account of an Financial Services Authority investigation into the collapse of RBS.
The FSA investigation concluded that no action should be taken against the bank’s bosses, including former chief executive Sir Fred Goodwin, after it had found no evidence of fraud or dishonest activity.
'Phoney war' between government and bankers
For the last couple of years the banking bosses have waived their bonuses even as their star traders have been paid, writes Channel 4 News Economics Editor Faisal Islam.
This year a new government, new banking bosses and a new attitude, even as taxpayer subsidies continue and austerity bites everywhere else.
The PM is trying to stress the need to put an end to so-called "banker-bashing".
The tension between government and bankers seems a bit of a phony war. It's unlikely that the Treasury will seek to stop bonus payouts.
Many in the City will tonight feel relieved at the Prime Minister's relaxed tone. The bankers seem to know that the Government has a vital shared interest with the banks in promoting a private sector-led recovery, so that lost public sector jobs can be replaced.