Banks Rush Through Bonuses

Following its scoop yesterday about bankers still being paid bonuses The Times newspaper followed it up today with a story claiming that there was going to be a ‘stampede’ by banks to beat the government’s plan to tighten up the rules.

Yesterday it emerged that the Royal Bank of Scotland which has the dubious honour of recording Britain’s biggest corporate loss and whose bosses had to quit in disgrace still intended to pay out huge amounts of money in bonuses. RBS was only saved by a vast bail out by the taxpayer and consequently is 70 per cent owned by the government.

Now it is reported that Barclays and Lloyds are going to give hundreds of millions of pounds away in bonuses. Lloyds was bailed out for £17bn by the taxpayer. Barclays, another recipient of government support in the form of hefty loans and guarantees, is said to be planning to give even bigger bonuses than Lloyds.

The banks intend to ‘get under the wire’ with their plans before the April budget when a White Paper is to be published which will strengthen supervision of the banks. The intended legislation will give the non-executive directors more powers over bank bosses.

Business secretary Peter Mandelson has said the behaviour of RBS could alienate ordinary people. Tory Shadow Chancellor George Osborne said it would insult taxpayers if banks owned totally or in part by the government paid out big bonuses.

“ To increase taxes on people earning £20,000 to pay the bonuses of someone earning £2million is totally unacceptable,” Osborne said.