Osborne urged to block bank bonus hike

15 Jan 14

Chancellor George Osborne has today been urged to block attempts by the state-owned Royal Bank of Scotland to increase the level of bonuses it can pay employees

The Labour party said the government should rule out any changes to current restrictions following reports that the bank – which is 82% owned by taxpayers following a bailout in the financial crisis – wanted to exceed existing limits.

Under European Union legislation that came into effect this month, banks in the EU can only award bonuses worth up to one year's pay to bankers. However, this can be doubled if shareholders approve.

Labour’s shadow chief secretary to the Treasury Chris Leslie said it would not be right for Osborne to approve an increase in the cap at a time when bank lending to businesses was falling.

‘It shouldn’t have taken the EU to act to rein in excessive bonuses, but there has been no action from the chancellor here in Britain,’ he said.

‘As the majority shareholder, the government should reject any request from RBS to increase the cap. We will put this to a vote in the House of Commons as part of our opposition day debate on the government’s wider failures on banking.’

The Treasury said no application to increase the bonus limit had yet been made. The government is challenging the EU legislation in court, warning that it would lead to higher salaries that run counter to attempts to make banks more stable and prudentially sound.

 

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